Partner Article

We need to market region to compete

IN last week’s commercial property section in The Journal, the report entitled ‘Lowest take-up for regional office sector’ caught my attention.

As the regional economic centre, it is good in one way to find that we are running out of office space.

Even with low demand we can see that the terms offered by landlords are beginning to harden with incentives for tenants to take space and longer leases reducing.

It will take further time to see rents rise to a level that makes development viable again and developers start building more.

It is, however, not a good move to increase rents that will reduce the region’s competitiveness and ability to attract new tenants, as this may encourage them to move elsewhere, such as Leeds or Manchester.

The other dynamic in the market place is the overhang of space outside the city centre, which is offering much reduced rents.

This is good for the sub-sector of the office markets that do not wish to be centrally located, but do want good accessibility to Newcastle city centre.

This space will be available for some time with competitive rents which will help attract investors.

So while the regional office report from last week might on the face of it seem very negative, there are positives. There are steps that need to be taken to create a plan for the delivery of office space and to secure the region’s economic base in the services sector.

The first step is to increase the level of demand for office space. This will address two areas; the inward investor seeking office space in Newcastle city centre because they need to be centrally located and the footloose inward investor seeking low-cost back-office space, as they do not need a central location and could work in any region across Europe.

I come back to the theme I’ve set out before; we must market the region much better than we have if we are going to compete strongly.

The marketing strategy is straightforward; promote the region, the city or town, and the development site in a joined-up manner.

This needs the region’s public sector to box more clever, by the coordination among the North East Local Enterprise Partnership (NE LEP) and all of the councils comprising the region, with the private sector offering sites and premises for occupation.

The other factor to address is ensuring that there is a clear differentiator between the centrally located office space and that which is outside Newcastle city centre.

Each can address different market segments – the city centre space for the high-value services sector, the outer city centre for the lower cost volume back office space.

We also need to have the availability of sites in Newcastle centre to develop in the near future; having no office space will be severely damaging to the economic health and wellbeing of the region.

Newcastle City Council has recognised this with the support given to the Stephenson Quarter development and I applaud the administration’s foresight in this investment.

They also have other tools available through the City Deal and NE LEP financial support, linked with potential European funding.

The picture rapidly changes in the fiscal landscape and early action is required to set the tools out for potential developers, and investors to understand them and work in partnership with the council in delivery.

The developers need confidence that the council will deliver and reputation is essential when the developer and its investors are comparing returns from development in different cities against the risk that is posed.

It is important, therefore, that we see this joined-up councils approach without further delay.

This was posted in Bdaily's Members' News section by Kevan Carrick .