IN THIS, our final quarterly deals report of 2007, it is pleasing to look back on what has been a very busy year for the property industry in the North-East.
It is unfortunate that the end of 2007 should be overshadowed by the events surrounding Northern Rock and it is still uncertain as to exactly what will happen, but the strong interest that the group has attracted from bidders suggests that there is a fundamentally strong underlying business there to acquire.
As well as being a major employer in our region, the Rock, with its corporate and social responsibility programme, has become an integral part of our local community through its foundation and its sponsorship of worthwhile causes.
It seems that the business has simply paid the price for events which have taken place far across the Atlantic and over which it had no control.
Economists are split as to what the outlook is for the global economy, let alone the national and local economy, over the forthcoming year and I am certainly no economist nor a crystal-ball gazer.
My impression is, however, that the
underlying local property economy remains sound and the banks are not pulling down their shutters. It is certainly true that the banks are tightening up their lending criteria – perhaps this was a discipline that the market needed.
Some commentators believe that a lot of businesses are currently pausing for breath and that come the new year it will be business as usual. I am not convinced that it is quite as simple as that but am hoping it will be.
Our own experience is that transactional property work remains busy and while certain transactions have faltered, the vast majority are proceeding and will proceed to completion. In addition, many of our clients see the current market conditions as an opportunity to secure both quality investments and development opportunities.
The property professionals within our region all remain busy and contractors report fairly healthy order books going forward and long may this continue. It certainly is true that the residential market has been checked. However, the demand for new homes in the future will undoubtedly continue to fuel the market.
The North-East as a region has weathered economic storms before. Fortunately, we are not, or certainly have not traditionally been, subject to the boom and bust cycle which has affected other regions in the UK, particularly the South-East.
The office market in Newcastle remains strong with the main complaint being that there is a shortage of high-quality space in the immediate pipeline. There are many developments which are planned, some have already commenced and the developers undertaking those schemes will be doing so in the full knowledge that those that have developed speculative office schemes over the past 10 years have generally been successful and been rewarded with pre-lets. In Newcastle, Time Central moves towards practical completion in the new year and Moonglade has announced its redevelopment plans for the former Welbar House (now demolished). This part of the city will certainly be a hotspot for development activity over the next five to 10 years.
On the industrial side, Easter has recently completed its development of 10 units at Easter Park, Middlesbrough, and has already been rewarded with a sale of the first unit and the other units are attracting strong interest.
At Teal Farm Park, Pattinson Industrial Estate, Washington, Hellens Group are progressing with their development of 55,000sq ft of office and industrial space. They will be relocating their head office and operations to the development.
The industrial units being constructed have recently been placed on the market to let and completion is scheduled for next May.
Washington is certainly a popular location for businesses with its excellent road links connecting it quickly to both the A19 and A1.
Cobalt Business Park remains a favoured out-of-town office location with Newcastle Building Society being the latest occupier to confirm its move to the park.
At Belmont in Durham, Mandale are pressing ahead with their redevelopment of the former LG Phillips site which will eventually provide in excess of 0.5m sq ft of space. It is certainly true to say that a combination of interest rate rises towards the end of this year and the Northern Rock situation have had an effect on our market, but it is confidence that is the key to going forward. Finally, may I take this opportunity to wish all of our readers a peaceful Christmas and a very prosperous New Year. May I also pass on my thanks to all those surveyors who have supplied the information which has enabled me to compile the accompanying deals table.