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Durham City could miss out without immediate stock of office developments

Greg Davison, Partner, Cushman & Wakefield in Newcastle
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Commercial property experts are warning that Durham City could lose out on significant inward investment and job creation unless it provides suitable office space in the next 12 to 18 months.

Based on recent research by the Newcastle office of Cushman & Wakefield, in the first six months of 2018 there were enquiries from occupiers looking for a combined 730,000 sq ft of office space across the region which could have considered Durham, with an average enquiry size of 40,000 sq ft. 

This equates to the equivalent of in the region of 6,700 jobs, a good proportion of which could be attracted to, or retained in Durham city centre.

These enquiries represent a significant increase from the second half of 2017 when enquiries came in for 330,000 sq ft with occupiers seeking, on average 20,000 sq ft. 

Enquiries have come from both private and public sector organisations, with requirements ranging from 20,000 to 120,000 sq ft.  

Currently Durham City has no office space available to meet these requirements. Other towns and cities in the North East, including Newcastle, Middlesbrough and Darlington, have all increased commercial property development in recent years, which is attracting footloose occupiers.

However, with the proposed development of Aykley Heads and neighbouring sites, The Fram Well adjacent to the railway station, and Milburngate on the banks of the River Wear, Durham does have the opportunity to address this issue.

While Aykley Heads is aiming to create provision for around 6,000 new jobs, it is still in the very early stages of planning and development and, therefore, unable to meet the immediate requirements of potential occupiers looking to locate in Durham.

Milburngate, for example, has the potential to bridge the gap in the short term. Its developers have responded to the market requirements and altered its plans, which have been submitted Durham County Council and will be heard by the planning committee at the beginning of December, to create offices within the first phase of the £160m mixed-use development. Subject to planning, these offices, as part of the first phase, will begin construction early next year for completion at the start of 2021.

The Riverside has already proven to be a suitable location for office developments having helped retain more than 1,000 jobs in the city at Freemans Reach, while the county council has also selected it as its preferred option for its new County Hall.

Greg Davison, partner at Cushman & Wakefield, said: “Durham’s global reputation as a City of significant heritage and home to one of the UK’s most highly-regarded universities, is undoubted and yet, commercially at least, it has not had the infrastructure to build on that reputation.

“There have been a number of examples recently where occupiers have set out to seek office premises across the UK, but they will only focus on those cities that can demonstrate an available pipeline of suitable stock.

“In most cases, they are looking on a 12-month time horizon. We have one live example at present, where the decision to locate in the region will, to a degree, be dependent on the availability of office space.

“Put simply, Durham cannot compete to attract businesses such as this to the city on the timescale they require. Given that office development tends to take 18 to 24 months to deliver, without speculative development of appropriate scale, any city without an established pipeline is going to be at a disadvantage from the word go.”

Greg added: “Durham County Council’s ambitious plans for Aykley Heads will bring significant benefits, but the immediacy of the enquires requires a ready supply of office stock with a critical mass to meet occupier needs.

“To turn this situation around the city needs developments that can meet the shortfall.  There are some positives on the near horizon with developments such as Milburngate, which is at the very core of the city and where occupiers want to be, helping Durham again compete on a national and global stage in attracting inward investment in the form of new businesses.”

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