Moving into pastures new with property investments

Jun 12 2007 By Nigel Stirling, The Journal

South Tyneside has been the poor relation to more established industrial and office locations in the region like Gateshead's Team Valley. But planning roadblocks have forced developers to look eastwards for new opportunities, writes Nigel Stirling.

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City & Northern has been one of the more successful "success" stories among North-East-based property developers in recent years. The company, run by brother and sister-team Elliot Ward and Cath Cannon, has chalked up a number of worthy schemes on the south side of the River Tyne, notably the 83,000sq ft Watermark in Gateshead which it sold to City fund manager Morley in February last year for £17.1m.

Its current flagship scheme - the £35m Baltic Place office and hotel scheme behind Gateshead Quays, with Scottish property company Robertson Property - has powered the company into the top league of property development companies operating in the region.

But, despite its success in securing the site for 131,000sqft of offices and a 120-room hotel on the site of the former Kelvin Works Foundry, sites for its smaller schemes in its traditional territory of Gateshead have become increasingly difficult to secure.

Director Cath Cannon says that five years ago City & Northern's activities were almost exclusively confined to the Team Valley and Gateshead.

The problem of finding sites had emerged in Gateshead and the Team Valley, largely thanks to the Highways Agency move to clamp down on schemes which would add traffic to the congested nearby A1.

Cath Cannon said: "Land we would normally secure for industrial use in some locations has become more suitable for office developers, which drives the price up."

This has led to the developer spreading its net to include South Tyneside, and last October completed the first phase of a 70,000sqft scheme at Blue Sky Way, Monkton Business Park, Hebburn, South Tyneside, with joint venture partner Robertson Property.

Robertson Group managing director Bill Robertson said he was confident of a successful completion to the first phase of the Hebburn scheme.

He said: "Blue Sky Way is in a fantastic geographic position for businesses, with easy access to the A19 and A1.

"It is only a few miles from Sunderland, South Shields, Washington and Newcastle. Newcastle Airport and Durham Tees Valley Airport are also close by, making this a development with easy access to Europe and the rest of the world."

He added: "Blue Sky Way has the potential to attract businesses from busy town centres and research shows that demand for high-specification office space in the region is still high."

Closer to the MetroCentre, Gateshead, there have been some notable exceptions to the logjam of development created by the Highways Agency's block on schemes.

Halifax Court, Dunston, where a development of 34,000sq ft only had 4,000sq ft of space available, and some parts of the scheme had been sold for up to £75 per sq ft, by last December.

Bill Naylor, head of Gateshead-based property agent Naylors chartered surveyors, believes the avalanche of investment into commercial property has made investment into previously unfashionable business areas such as South Tyneside viable for the first time in years.

He said: "With occupier interest picking up in the final quarter of the year, 2007 is primed to be extremely successful, as long as the planning hurdle does not frustrate the market from achieving its potential."

Which will be welcome news for both the property industry and businesses eager to establish themselves in what in the past could passably be described as the economic wastelands of South Tyneside.