We have inherent stability here, so steady as she goes

Apr 30 2008 By Kevan Carrick for The Journal

I’M sure we all welcomed the recent commercial property market report from the Rics – featured in this section last week – which painted a positive picture for the sector in the North East and reflected the generally upbeat nature of the regional economy as a whole.

I noted that areas traditionally viewed as being the furthest removed from London economically, namely the North East and Scotland, have fared best in the commercial property sector.

Some have put this down to the view that the North East economy will ultimately follow where London leads, but in my opinion we have developed an inherent stability in this region which, with careful management, we can sustain.

The key to long-term growth and stability is supply and demand. At present we have quality space available at competitive prices across all sectors, teamed with strong demand from new and expanding businesses. The challenge is for the public and private sectors to work together in order to maintain long-term economic delivery.

One major influence is transport infrastructure, which I focused on last week. To ride the upheaval in the global economy, we need to demonstrate that the North East is an attractive place to do business.

This means offering workable logistics solutions as well as an attractive living and working environment. We must work with Government, development agencies and local authorities to continue the drive for improvements in road, rail and air travel.

Another threat is the increasing tax burden on businesses.

Things like development gain payments always present the risk that the pace of construction will slow, while we must look very carefully at the overall state of the economy before introducing things like the supplementary business rate.

I’m not saying these are bad, if the money is used wisely, but they will inevitably reduce the flow of investment available for building development and improvement.

Of course, if the global downturn continues, there is bound to be some slippage in the local economy, which is why we must work to anticipate demand and to meet it.

If too much space is on the market, we risk a fall in prices, while too little space will push up prices and potentially deter inward investment into the economy, thus creating a spiral of decline.

The risks are there, but for the moment I’d say it’s steady as she goes. We have the experience and knowledge in this region to prosper in the long term. Innovative regeneration projects, such as those we have seen over the past decade, can play a huge role in maintaining positivity within the commercial property sector and the wider market, so it’s also vital that these continue.

Kevan Carrick is a partner in JK Property Consulting LLP and policy spokesman for Rics North East.