Unlocking opportunities: The North East shines in property despite broader economic challenges

With offices across the UK, we’re championing diverse businesses in different regions – including the North East, which is currently a powerhouse for logistics and industrial hubs. Our Associate Debt Finance Director, Matt Gudgeon, put down his thoughts on why the area is a prime location for robust investment, and why OakNorth continues to support its entrepreneurial potential.

In the face of challenging economic conditions, the North East has emerged as a beacon of resilience and prosperity, defying national trends. CoStar’s latest market data provides compelling evidence that the North East is not only weathering the storm but continues to outperform the national average.

Investing in the North: a lucrative trend

Recent trends in the property market indicate a notable shift towards investing in higher-yielding Northern locations, and the North East stands as a prime example. Investors are increasingly recognising the region’s potential for robust returns on investment, coupled with lower barriers to entry compared to traditionally sought-after southern markets. Low average prices and good rental returns make it a particularly attractive location for investors looking at developing or expanding their buy-to-let portfolio.

Resilience in industrials and logistics hubs

Industrials and logistics hubs are also emerging as resilient assets in the region. Just last month, LV Logistics, a global logistics business, opened a new state-of-the-art, 16,000sq ft warehousing and distribution depot in Hebburn as it looks to continue investing in the North East. According to the ONS, the number of business premises used for transport, logistics, and warehousing in the UK has almost doubled in the last decade, and the North East’s strategic location and infrastructure advantages make it a stronghold for such developments. As e-commerce and supply chain dynamics evolve, the demand for industrial spaces is expected to rise, further solidifying the North East’s position as a reliable and recession-resistant investment destination.

Unlocking potential: free ports and Levelling Up Fund

The introduction of Free Ports and the Levelling Up Fund is catalysing growth in the North East, unlocking potential development sites and spearheading regeneration projects. The UK government is delivering on its level up promise for example, confirming the purchase of the permanent site of the Darlington Economic Campus (DEC) in Darlington last month. The new site, due to be completed in 2026, will act as the treasury’s second headquarters, housing 1,400 civil servants.

Also last month, Durham University, in collaboration with the Universities of Newcastle, Northumbria, and Sunderland, initiated the Innovating Together – Universities in the North East (In-TUNE) partnership. This collective effort aims to enhance business support for local companies with the overarching goal of stimulating economic growth in the North East.

Deals on the ground: A microcosm of success

On the ground, specific deals in key North East locations further illustrate the region’s diverse investment landscape. In Newcastle for example, the focus on Permitted Development schemes in the city center reflects a strategic approach to urban development. County Durham meanwhile, is witnessing a surge in leisure and hospitality projects, meeting the growing demand for overnight stays, a testament to the region’s attractiveness as a tourism destination. Teesside is also experiencing a boom in student accommodation and serviced apartments, aligning with the region’s commitment to meeting educational and business demands head-on.

With a focus on resilience, strategic initiatives, and a spectrum of diverse deals on the ground, the North East is proving to be a powerhouse in the commercial property landscape, offering a compelling narrative of growth and prosperity amidst broader economic challenges. If you’re a growing business in the North East looking for property financing, get in touch with an OakNorth regional expert today.

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