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Published 1 marzo 2023
As the BTR phenomenon fanned out across the UK from its roots in London, it’s fair to say that the North East was not one of the first beneficiaries of the trend. However, that is now emphatically changing as a series of new projects are coming forward particularly in Newcastle.
Last year, JLL reported that Newcastle was still only 14th in a league table of BTR development pipelines across UK cities. However, that picture is rapidly changing and, in the same way that the city’s football team has steadily climbed the Premier League this season, Newcastle’s BTR sector can also expect a move up the table.
This would certainly address some of the BTR development imbalance that prevails across UK cities. For example, Manchester has less than double the population of Newcastle, but has more than five times as many BTR homes either completed or under construction. Of course, BTR is driven by many more factors than just population. Birmingham has the largest BTR development pipeline at 9,400 homes which reflects that 75% of the city-centre population are under 34.
As DAC Beachcroft Residential Development Partner, Daniel Kendall observes: “These statistics feel like they’re more about untapped, potential rather than Newcastle and the North East not being as ripe for BTR development. There’s no doubt that the lessons that are being learnt about what makes successful BTR development will not be lost on those who are progressing schemes across the North East.”
Three notable schemes have already been completed in Newcastle - Regent Centre, The Forge, and Hadrian’s Tower - while another group are either moving into the construction phase or are progressing through planning. As at May of last year, JLL recorded around 2,000 BTR units in Newcastle – the vast majority of which were still in development.
Dubbed by the local media as Newcastle’s ‘most Instagrammable’ apartment block, The Forge was developed by Panacea Property Development, funded by the Moorfield Real Estate Fund III, and was then acquired by Grainger plc in 2021. It was Grainger’s first purpose-built BTR investment in the city, which incidentally is where the company was established in 1912 and remains headquartered. At the time of acquisition, Grainger CEO, Helen Gordon, commented: “The Forge is proven as a great place to live, and, provides us with immediate rental income, further boosting our ambitious growth plans”. Accordingly, the business which is the UK’s largest private landlord is known to be running a rule over other opportunities in the city.
One of Newcastle’s most prominent projects, which is currently in gestation, is the BTR component of the Helix development – the collaboration between Legal & General, Newcastle University and Newcastle City Council to create a £350m innovation quarter in the centre of city. The overall vision is to create 700 homes with Legal & General building two BTR towers in the centre of the 24-acre development. The towers will provide 316 flats together with new public realm, retail and leisure.
It’s a site which could hardly be more embedded in Newcastle’s history. Originally a coal mine, the site was later home to the Scottish & Newcastle Brewery where the legendary Newcastle Brown Ale was brewed. When the brewery closed in 2005, the city fostered a new regeneration project that, amongst various phases, is creating the new Spark and Lumen office buildings. The National Audit Office has taken space at The Spark which offers 106,000 sq ft of Grade A offices and is already more than half let. This infusion of new office workers into the heart of the city is clearly very complementary to the BTR element of the overall development.
Andrew Kail, CEO of Legal & General Retirement Institutional, comments: “This is the next phase of the development, a build-to-rent scheme to appeal to a market that’s after high-specification rental accommodation in the city centre, and it forms part of the wider vision to create a vibrant place for living, working and collaborating.
“One of the important things about the Helix site is that we can use it to attract skilled people and retain them in the region, and part of that means bringing them accommodation that they can move into straight away.”
Whilst Newcastle is not surprisingly the focal point of BTR development in the region, there are now signs of other projects coming forward outside the city core.
BTR provider, Placefirst, has just finished a public consultation for a single-family development in Benwell – to the west of the city centre - after winning the tender to develop a new high-quality neighbourhood. The brownfield site has been vacant for 10 years and its redevelopment would deliver 146 single-family two, three and four-bedroom homes in “a modern and sustainable interpretation of terrace housing with high-spec, energy efficient homes for the modern renter”.
Placefirst Planning and Development Manager, James Litherland, comments: “The project will transform this prominent brownfield site into an exemplar BTR neighbourhood with energy-efficient homes, shared communal and public open spaces, and a unique landscape masterplan with a network of sustainable urban drainage systems.
“The development represents our continued growth in the North East through successful partnerships with local authorities to provide the highest quality homes for long term rent.”
Placefirst’s is building a portfolio of single-family BTR homes in the North East which includes projects in Hartlepool, Hetton-le-Hole, and Durham.
Back in the heart of Newcastle, Packaged Living has gained planning consent for the Quayside 12 development which is set to become the city’s largest BTR scheme. With plans approved for 289 units, the scheme will sit on a 1.5-acre riverside site alongside the river and is targeting net zero carbon construction targets. The brownfield site is the last remaining plot identified for development in the masterplan prepared by Sir Terry Farrell in the 1990s.
Mark Woodrow, Managing Director of Packaged Living comments “We’re delighted to have reached this important milestone in our delivery of an iconic building at the heart of Newcastle’s quayside. The scheme will provide much needed quality, purpose-built rental homes to Newcastle”.
On Pilgrim Street in the heart of the city, Cale Cross House – a former office tower – is being transformed into 250 low-carbon, high-specification co-living apartments. Cale Cross House, situated next to the Tyne Bridge, was built in the 1970s as commercial office space, but has been unused for several years. Developer, Beech Holdings purchased the site for £5.35m, and obtain consent under permitted development rights to progress the scheme.
It is the business’s first development in a planned expansion across regional UK cities. Stephen Beech, chief executive and founder of Beech Holdings, comments: “We’ve been working on this deal for some time, it’s an exciting next step for Beech Holdings expanding into regional cities.
“This area of Newcastle city centre has been somewhat overlooked in recent years, but this is where we excel, transforming unloved properties into modern, beautiful homes for residents.
“We want to invigorate and revive Newcastle’s community and business eco-system in the area, and that comes with an injection of people. We will offer a super-premium, but affordable choice of co-living in the city centre.”
A site on Strawberry Place next to St James’ Park – the home of Newcastle United – was also expected to see a major development including a BTR project but that has been superseded by the club’s desire to extend its stadium. The site had been sold by former Newcastle owner, Mike Ashley, and was eventually controlled by Reditum Investments.
On the former car park site next to the legendary Strawberry pub, there were plans for a 21-storey tower of 300 apartments, a 200-bedroom hotel and a 12-storey 115,000 sq ft office block. However, the consortium of the Public Investment Fund of Saudi Arabia, PCP Capital Partners and the Reuben Brothers which now owns the club has bought out Reditum and is exploring plans for stadium expansion.
DAC Beachcroft’s Daniel Kendall concludes: “Newcastle is leading the way for the North East BTR market. I anticipate more activity for the city and for this to spread beyond into other towns in the area, particularly as part of their regeneration projects."
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