Work has started on the first business park development north of the River Tyne since the onset of the recession.
Earlier this year the Washington-based Hellens Group decided to breath life into an industrial development it moth-balled almost five years ago. The company had acquired a site close to the A19 and just north of the Tyne Tunnel and drawn up plans for a 17-unit business complex.
But even with the recession officially over the group found it impossible to raise the £2.6m needed to kick-star the project. “The banks just weren’t lending for speculative property building even when there was a proven case and proven demand,” said Hellen’s chief executive, Gavin Cordwell-Smith.
As an alternative source of finance the firm approached the North-East Local Enterprise Partnership, which manages the multi-million pound Growing Places Fund as part of its North-East Investment Fund. It agreed to a £460,000 cash injection to allow site work to re-start.
The North-East Investment Fund and its Growing Places off-shoot were put together to provide finance for infrastructure, housing and economic projects that stalled as the recession hit and have been impossible to revive because of a lack in banking confidence.
Hellens, which specialises in land and property regeneration, also secured a £1.1m loan from The European Regional Development Fund and found the remaining money from company funds to begin work.
The West Chirton site will provide 34,000sq ft of business and office space and is due for completion next June. The building phase has already created 150 jobs.
“The offshore and manufacturing sectors are very active on the north side of the Tyne at the moment,” added Cordwell-Smith, “and we hope to pick up demand from businesses looking for new premises or a location they can expand into.”
And work is nearing completion on a second Hellens Group site — this time south of the Tyne at Washington — and which was also revived with contingency and European cash. The £1.2m Teal Farm project has 19,000sq ft of space spread across four units. The 100 construction jobs created by the development are expected to be replaced by 124 permanent posts when the site is fully occupied.
Faced with the same funding shortage the Tyne and Wear project received a £680,000 grant from the European Regional Development Fund and a £200,000 top upload loan from the Growing Places Fund.
“We are very grateful to the North-East LEP for supporting us,” said Cordwell-Smith. “These are the first two speculative developments across the region since the onset of the credit-crunch.”
Both projects have received praise from Jeremy Middleton, the chair of North-East LEP’s investment panel. “They have created employment during the construction phase and will provide even more once they are occupied,” he said. “These Hellen’s Group business park projects are precisely the kind of development that the LEP’s North-East Investment Fund was set up to support.”
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