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The supply chain of out of town offices may have gone full circle over the last three decades on Wearside and Teesside. Basically prior to 1980 it was not viable, neither was there any demand for out of town offices outside the established main city and town centres.
The introduction of the first Enterprise Zones in 1981 did bring about a change to overall development viability because of the lower yields producing higher capital values for developers and investors arising from the 100% capital allowances available and the rate free periods available to occupiers during the life of the zones.
Upon Wearside the development of Doxford Park was an outstanding success attracting major occupiers including Northern Rock, Nike, London Electricity, Barclays Bank, Morethan and Arriva.
Further north at Hylton Riverside the mixed use schemes alongside the A1231attracted companies including Berghaus, Lloyds Bank, Sunderland NHS, Helena and Honeywell.
The recent occupation of the proposed Northern Rock (240,000sq ft) building at Rainton Bridge by npower has seen the largest take up of out of town space on Wearside and indeed the whole north east for many years. Goodman (formerly Akeler– the developer at Doxford Park) committed to the construction of 200,000sq ft of speculative space at Rainton Bridge alongside the flagship NR building with further phases to follow once the initial buildings are occupied.
On Teesside, the original zones were in a former heavy industrial area on the south bank of the river attracted the development of the Cad Cam centre and further new high quality schemes were brought forward at Preston Farm,Stockton.
Subsequently, new out of town parks have been brought forward at Teesdale, Wynyard and Kirkleatham - some supported by the then available “gap funding from the public sector”. There has since been a drying up of new build projects arising from the economic recession and funding difficulties for speculative development. Other projects such as North Shore, Stockton may be delayed pending occupier demand improving or significant pre-lets being secured.
Developers have to look at nearby competing schemes including Morton Palms at Darlington and the substantial availability within East Durham at Peterlee and Seaham where the EZ tax incentives available brought forward in excess of 0.6 million square feet of new offices - a high proportion of which remains vacant.
It appears that without take up of existing space there will be little or new speculative development on out of town parks within Wearside and Teesside. In addition the public sector cash constraints will also slow down both development and the occupation of space by bodies within that sector.
Ian Parker and Craig Stobbart, Directors – National Markets – Offices, GVA Grimley
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