Newcastle real estate
Prime Tyne When Liverpool pipped Newcastle and Gateshead for Europe’s Capital of Culture 2008, the North East went into shock. Tyneside and its lawyers are simply redoubling their efforts to change the skyline and much more MARIA SHAHID A MIXTURE OF DEFIANCE AND annoyance tinges any conversation with a Geordie regarding the recent competition to become European Capital of Culture 2008. Newcastle and Gateshead’s near miss of the title to Liverpool hit a sour note locally. ‘We were robbed,’ one Newcastle partner sums up. The disappointment is understandable; Tyneside is in the midst of a cultural renaissance. The stunning spectacle of the ‘winking eye’ Millennium Bridge greets train travellers as they cross the Tyne, while the Baltic Exchange, a former grain warehouse, part of the former Baltic Flour Mills that now houses a constantly changing display of contemporary art, is visible on Gateshead’s Quayside. The Sage Music Centre, designed in Sir Norman Foster’s signaturestyle, all gleaming glass curves, is also starting to take shape and will, when open, have a 1,600 capacity concert hall as its centrepiece. Newcastle’s Quayside, meanwhile, is buzzing with business and leisure
visitors, housing law firms Dickinson Dees and Ward Hadaway, as well as a mixture of hip hotels, bars and restaurants. Comparisons with Canary Wharf are not as farfetched as they may initially seem. ‘The Quayside has become a self-sustainable part of the City,’ enthuses Malcolm Lloyd, a partner at Ward Hadaway, one of the first law firms to relocate its offices to the area. Sir Ian Wrigglesworth is chairman of The Newcastle Gateshead Initiative, the destination marketing agency for the region. He was charged with overseeing the Capital of Culture bid. Wrigglesworth points out that the agency had launched its campaign to ‘raise the consciousness of the area’ long
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Newcastle real estate
Location is key Sheltered from London’s more fickle economic cycles, the region’s self-contained real estate market is flourishing in the wake of this urban renaissance. Wrigglesworth is also executive chairman of UK Land Estates, one of the most active real estate players in the local market. Both the company and its chairman typify the locally driven investment in the area. One of its most recent projects was the acquisition of regional development agency One North East’s £120m industrial portfolio. With a strong loyalty being shown to local businesses, the region’s law firms are winning the sort of instructions that many London real estate firms would clamour to do. UK Land Estates instructed its longterm adviser, Eversheds’ Newcastle office, on the One North East deal. ‘The North East has a very strong regional identity, with loyalty to the
The Baltic Centre for Contemporary Art
> before any consideration had been given to the 2008 title. ‘We needed to improve the profile of the area,’ he explains. ‘The campaign was based around the tremendous potential of the region.’ His pride is palpable as he notes that ‘there has been an incredible growth in confidence over the last five years. Business and leisure activity has gone up dramatically in that time’.
local firms,’ Wrigglesworth notes. ‘The law firms in the city provide a first-class service.’ Eversheds is still the only national firm with a true real estate presence in the city. Although Wrigglesworth concedes that more competition between the law firms would be welcome from a cost perspective, it seems unlikely in the short term. Along with Eversheds, there are three other heavyweights – Dickinson Dees, Ward Hadaway and Watson Burton – dominating the city’s real estate scene for larger projects, along with up and coming Robert Muckle.
Supply and demand In contrast to the evolution of other commercial centres across the UK, Newcastle’s Dickinson Dees, Ward Hadaway and Watson Burton are content, for the time being at least, to forego a national presence in favour of reinforcing their ranks locally. ‘We’re wedded to the region,’ declares Ian Ward at Dickinson Dees. The firm’s client base, encompassing the likes of Bellway and Hanro, typify the local owner-run businesses and private investors that predominate in the market. ‘We’re not flush with Plcs in the North East,’ Watson Burton’s Richard Freeman-Wallace notes wryly. (Indeed the
FROM HUMBLE BEGINNINGS… THE LOCALS Aside from Eversheds, three local firms have come to dominate the legal scene in Newcastle – Dickinson Dees, Ward Hadaway, Watson Burton. All have experienced phenomenal growth over the last few years. Dickinson Dees’ meteoric rise over the last six years has seen the firm become one of the region’s largest law firms, with a staff of over 700 and compound growth of 15%. In common with its local rivals, the firm has eschewed merger with a large national firm in favour of a single-site strategy. ‘We don’t need to be anywhere else at the moment,’ marketing partner Mark Warwick comments. The firm’s policy of growing nationally from Newcastle, aided by its lower cost base, has paid off handsomely: new clients include The National Trust and London Electricity. Despite Dickinson Dees’ intimidating grip on the local market, along with rivals Watson Burton, Ward Hadaway and Eversheds, Warwick believes that there remains room in the city for national firms prepared to invest in niche areas, citing the
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example of Irwin Mitchell. ‘Newcastle’s legal market is still relatively under-resourced,’ he said. It is not a view shared by all. Malcolm Lloyd at Ward Hadaway is of the opinion that ‘Newcastle’s legal players have a strong foothold on the local market, leaving little room for outsiders’. As a former managing partner and head of property at Pinsents in Leeds, Lloyd believes that there are comparisons to be drawn with Leeds, where the ‘Big Six’ – comprising Addleshaw Goddard, DLA, Eversheds, Hammonds, Pinsents and Walker Morris – have come to dominate. ‘Competition between firms drove the growth in the Leeds legal market,’ he explains. ‘We are now experiencing the same legal revolution in Newcastle as happened there.’ Ward Hadaway is a relative newcomer to the Newcastle market. Established in 1988, the firm now boasts around 300 staff, with a turnover of £16.5m in 2003. Lateral hires – such as that of Lloyd and his Pinsents colleague, property litigator Alan Herbert – have played a key part in
the firm’s growth, as managing partner Jamie Martin explains. In common with Dickie Dees, the firm has pursued a single-site strategy from its Quayside headquarters, and is currently in the process of closing its South Shields office. Although frequently the subject of merger speculation, Martin is adamant that ‘a key plank of the firm’s strategy is to remain independent’. New clients for the firm include North Yorkshire County Council. Watson Burton completes the local trio who are now making their mark on the local market. The firm has achieved growth of over 20% during the last three years with a number of significant partner hires, including Freeman-Wallace who joined from Ward Hadaway in late 2002 and, more recently, IT and insurance lawyer Anthony Brown, from Eversheds. The firm’s real estate department alone has grown from 10 to 18 fee-earners in less than 12 months, and has seen an increase in fee income of 17.3% by winning a number of significant new clients, including Allied Irish Bank.
Newcastle real estate
Norman Foster’s Sage Gateshead is starting to take shape
> North East only has an eighth of the number of Plcs that operate from Leeds, the nearest major commercial centre.) Freeman-Wallace freely admits that Newcastle’s regeneration has brought with it a huge amount of work for the firm’s real estate department, which saw a 15% increase in turnover in 2003. His firm is currently involved in a £65m mixed-use scheme entitled Trinity Gardens, on the East Quayside, a stone’s throw from the Millennium Bridge, on behalf of Silverlink. The developer has already pre-let 60,000 sq ft of office space at the site to Dickinson Dees. Freeman-Wallace explains that the pre-let is indicative of the quick take-up of offices, which is prevalent in a city where good office space is still in very short supply. Led by demand from government and professional bodies, such as law and accountancy firms, looking to relocate, some commentators are predicting that office rents in the region will hit the figure (relatively high for the region) of £20 per sq ft in 2004. ‘Good office space simply walks,’ Freeman-Wallace enthuses.
At Robert Muckle, partners Jonathan Combe and Barney Frith make no bones about the firm’s concerted push in real estate. It hired seven additional fee-earners over the course of 2003, motivated by an unusually buoyant local market. The firm noted a 50% increase in turnover in 2003, and is aiming to increase this by a further 25% over the coming year. One of its main clients is local developer City & Northern, which the firm is representing on a mixed-use development at Metro Riverside, Gateshead.
Generating outside interest Robert Muckle is also currently acting on behalf of Irish investor McAleer & Rushe on 1 St. James’ Gate, which is due to be occupied imminently by
accountants Baker Tilly, and fellow Newcastle law firm, Watson Burton. McAleer & Rushe is one of a number of outside developers to be showing an interest in the region. ‘The property market in Tyneside has transformed,’ Wrigglesworth notes. ‘There was hardly any competition when we first started. Now, when any land becomes available it is hotly contested.’ Land Securities is just one of a growing number of national heavyweights that has shown an interest in the region, with its £75m retail/leisure complex known locally as The Gate. London & Regional is similarly involved in a residential development on the western Boulevard in Newcastle, while Chelsfield is understood to be buying up land, to the south of the main retail area on Northumberland Street in the city centre, in phases. One estimate is that 20%-25% of the money being invested in the city’s real estate is now coming from national, as opposed to local, sources. Interestingly, both Land Securities and Chelsfield have remained loyal to their London-based advisers on these deals. Whilst local lawyers admit that securing instructions from one of the large nationals would be a definite coup, they remain confident of their strong foothold on the Newcastle market. ‘A Geordie businessman would rather instruct a local firm,’ comments Ward Hadaway’s Lloyd. ‘There is a pride in doing so.’ He adds that with local players retrenching and expanding it leaves little room in the market for outside competition. In any event, with the added advantage of a lower cost base (partner charge rates compare very favourably with most cities at around £220 an hour), many believe that it is only a matter of time before Newcastle firms establish the necessary credentials with the national players, to secure their instructions.
Gateway to the North Whilst the East Quayside kick-started the regeneration of Newcastle, other areas, both
‘The property market in Tyneside has transformed. There was hardly any competition when we first started. Now, when any land becomes available it is hotly contested.’ Sir Ian Wrigglesworth, Newcastle Gateshead Initiative 64 Legal Business March 2004
Newcastle real estate
NEWCASTLE REAL ESTATE: THE MOVERS AND SHAKERS Firm Dickinson Dees
Key partners Ian Ward (head)
Key local real estate clients Hanro Group Ltd Gateshead Metropolitan Borough Council
Adrian Stanley (head) Adrian Hill Neil Robson (head) Malcolm Lloyd Lesley Fairclough Richard Freeman-Wallace
One North East UK Land Estates Plc Sage UK Ltd Barratt Homes Plc
Watson Burton Robert Muckle
Jonathan Combe Barney Frith
Silverlink Property Developments Plc Collingwood Developments Ltd City & Northern Projects Ltd
in and out of the city, are now being eyed up with interest by developers. Notable amongst these is Gateshead, long considered Newcastle’s poor relation. More known for its industrial heritage, the area is now undergoing a major facelift. Newcastle and Gateshead’s joint bid for the European Capital of Culture has had long-term benefits for the region. ‘Gateshead is five to ten years behind Newcastle in terms of its regeneration, but it has some exciting times ahead,’ Lloyd notes. Whilst the area’s redevelopment was initially being culturally led – with projects such Antony Gormley’s Angel of the North, Baltic The Centre for Contemporary Art and The Sage Gateshead music centre, all
Gateshead Millennium Bridge, known locally as the ‘winking eye’
housed on the Gateshead side of the Tyne – both the Quayside and the area behind it are now awash with development projects. National developer Terrace Hill Group is currently constructing the £250m Baltic Business Park. Terrace Hill has retained its usual City-based adviser, Denton Wilde Sapte, for the project. However, it is Dickinson Dees that is advising Gateshead Metropolitan Borough Council on the same business park, while Watson Burton is representing local firm
Key local deals in 2003/2004 Hanro at Citygate Phase 2 on the pre-let of the landmark building to the First Secretary of State. Baltic Business Park on behalf of Gateshead Metropolitan Borough Council. One North East on the £120m disposal of its property portfolio. For Sage on its multi-million pound new headquarters building at Great North Park, Newcastle. The £65m mixed-use development of Trinity Gardens on Newcastle’s Quayside on behalf of Silverlink. City & Northern’s mixed-use development of ‘Watermark’ at Metro Riverside, Gateshead.
Collingwood Properties on the development of a 250-bedroom Hilton Hotel overlooking the Tyne, which will also house conference facilities.
Confidence building Newcastle and Gateshead’s new found confidence is evident in their determination to press ahead with the regeneration of the area, despite losing out on the 2008 title. ‘Culture 10’ is a £140m programme launched by the Newcastle Gateshead Initiative; the target being to continue with the regeneration of the region, aiming to deliver 24,000 new jobs and £1.2bn of income by 2010. In addition, as one of the cities shortlisted for the title, Newcastle and Gateshead have been designated as a ‘Centre of Culture’ for 2008, along with Birmingham, Bristol, Cardiff and Oxford. It bodes well for lawyers. The region’s infectious optimism has noticeably changed perceptions both locally and nationally. Recent surveys indicate that the brain drain being suffered by most northern cities during the last few decades has started to reverse in Tyneside: law firms are having no trouble in attracting and holding on to their brightest recruits. Wrigglesworth believes that the culturallyled regeneration of the region has kick-started a turnaround in its economic fortunes too, although he acknowledges that it still has a long way to go. Lloyd at Ward Hadaway best sums up the optimism of local law firms: ‘There’s definitely a huge potential for growth and consolidation – Newcastle is a very confident place right now.’ email@example.com
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