Member Article

More development needed to keep up with growth of Newcastle’s expanding tech scene, report shows

Lambert Smith Hampton’s (LSH) latest Northern Powerhouse Office Market Report has revealed that the expansion of tech SMEs in Newcastle is boosting activity in the commercial property market, indicating a positive year for the economy despite an incredibly challenging backdrop.

The report reveals that office take-up in the city centre currently stands at 139,848 sq ft for the first three quarters of 2017, up 16% on the equivalent period in 2016, withactivity predominantly driven by smaller tech, media and telecommunications (TMT) businesses.

But, while demand for contemporary office space in the city centre is high, more development will be needed to keep up, with total availability having fallen by 11% in the city centre since the beginning of 2017.

While there are no developments currently underway, there are a number of exciting being delivered in 2018/19 which are likely to serve as a catalyst for future growth, including the joint venture between Legal and General, Newcastle University and Newcastle City Council on the former Newcastle Brown Ale brewery site, which will deliver 200,000 sq ft of grade A office accommodation across two buildings.

Alongside this, Marrico’s Strawberry Place site is another proposed development in the offing, with outline consent now in place to include 107,000 sq ft of grade A offices.

Northern Powerhouse Minister Jake Berry MP said: “Lambert Smith Hampton’s report clearly shows the strength and diversity of the Northern Powerhouse economy.

“More importantly, it reinforces the role that SMEs and other high growth industries play alongside the major corporates and institutions, in instilling a sense of confidence within the commercial property market; a factor which is fundamental to the long-term growth of the regional economy.”

Michael Downey, Office Advisory at LSH Newcastle, commented: “A respectable level of take-up is expected in the final quarter of 2017, although it will fail to bring the annual total in line with the 10-year average. However, the exciting schemes in the pipeline should be a catalyst for activity over the next few years.

“In the meantime, proactive landlords who look to tailor their assets to occupier demand, whether that be via contemporary fit-outs or smaller-sized suites, are likely to benefit from stronger leasing potential and rental growth.”

Read Lambert Smith Hampton’s (LSH) latest Northern Powerhouse Office Market Report by clicking here.