A £65m investment by L&G will fund 200,000 sq ft of offices at Newcastle’s Science Central. Claire Robson assesses the progress of the £350m regeneration project
The 24-acre Science Central site in Newcastle city centre is being developed as a science and technology hub to accommodate a 500,000 sq ft chunk of commercial space and 450 new homes. Born out of a partnership between Newcastle City Council and Newcastle University, Science Central opened its first building in 2014, yet a new commitment by L&G to fund £65m of offices is a significant step forward.
The Science Central development is gradually transforming a former brewery, famed for producing Newcastle Brown Ale, into a mixed-use community of academics, scientific organisations and technology-driven occupiers.
In June, L&G signalled its intent to become a long-term partner on the project by initially financing the delivery of 200,000 sq ft of grade-A offices.
L&G declined to comment on the deal, but Newcastle City Council hopes the first of the two office buildings will be complete in 2019 and leased by the council, who will seek commercial occupiers. The second building will be speculatively financed by L&G.
Nick Forbes, leader of Newcastle City Council, says: “Securing Legal & General as an investment partner is a major vote of confidence for Newcastle, one that demonstrates that this city is investment ready. Both Newcastle University and Newcastle City Council have already made significant financial commitments to support further investment and economic growth in Newcastle, helping us to create the jobs that will come to define future generations.”
Two buildings have already been completed at Science Central. November 2014 saw the opening of The Core. Offering 29,000 sq ft of flexible incubation space for science, digital and innovation companies, the building is 97% let and home to 27 businesses.
In February 2016, the doors opened at The Key, housing Science Central’s first research labs. Using similar technology to that developed for the 2012 Olympic Stadium, its lightweight fabric structure is built on the same principles as a soap bubble and is home to Newcastle University’s Institute for Sustainability.
We are crying out for space and the supply of grade-A stock is below 100,000 sq ft
Construction is under way on the university’s 100,000 sq ft Urban Sciences Building to accommodate the School of Computer Science, which will be linked to a Learning and Teaching Centre. That centre is due to open in September 2019 and will have a 750-seat auditorium.
Meanwhile, planning has been approved for the 76,000 sq ft Newcastle Laboratory which, on completion in early 2018, will provide accommodation and support facilities for science companies.
Newcastle University is keen to ensure Science Central incorporates a range of facilities to help nurture innovation and the commercialisation of cutting-edge scientific research. Professor Nick Wright, the university’s pro-vice-chancellor for research and innovation, says: “Science Central is the result of a long-term partnership between the university and council to develop a smarter, sustainable economy.”
He adds: “The site will be home to three national centres that will allow academics and business to collaborate on innovative technologies: the £30m National Institute for Smart Data Innovation, the £40m National Centre for Ageing Science and Innovation, and the £20m EPSRC National Centre for Energy Systems Integration.”
L&G plans to add to this pipeline with two further buildings providing 200,000 sq ft of offices. What are the chances of filling the space in a post-Brexit city with an annual take up of just 250,000 sq ft?
Newcastle does boast strong credentials. It is one of only six UK Cities of Science and was awarded this status back in 2004 by the then chancellor Gordon Brown in recognition of its strengths in fields such as medical science, healthy ageing and sustainable sciences. The city is already home to 250 companies in science and healthcare, in addition to 2,000 businesses operating in the creative and digital sectors.
Catherine Walker, inward investment director for Invest Newcastle, claims the investment body has received interest from more than 30 businesses involved in medical science and sustainability over the past 12 months.
She says: “As the landmark location for science and sustainability within the city, Newcastle Science Central provides businesses operating within the wider science and technology sector with an excellent opportunity to co-locate with like-minded companies as well as researchers, students and academics.”
Local agents also welcome the L&G investment and are optimistic the space will be filled. Lambert Smith Hampton director Neil Osborne says: “If you build it, it will let. We are crying out for office space and the supply of grade-A stock is now below 100,000 sq ft. There are decent requirements out there and the market will embrace any new development. It is a compact city centre and a lot of the buildings are listed. There are few opportunities to bring large floorplates to the market.”
Since July, two big city centre office deals have landed, with Convergys taking the entire 35,000 sq ft of office space at Newcastle City Council’s new development, The Rocket, and local tech occupier Zerolight signing up for 15,000 sq ft of offices at Quayside development Live Works. That has left occupiers with few options. There is no new grade-A space being delivered, with landlords attempting to meet demand by refurbishing existing stock.
The Science Central partners are keen to promote commercial opportunities across the site’s 18 development plots, claiming they can be ready for occupation within 24 months. There is also an opportunity to develop a 480-space multi-storey car park on the site.
“It is going to have a fabulous impact in terms of its scale, location and ability to deliver new grade-A accommodation,” says Cushman & Wakefield director Tony Hordon.
Investors such as L&G may also help position Newcastle as a key player within the Northern Powerhouse. With so much focus on Manchester, there is a danger that Newcastle will be left behind. Knight Frank partner Patrick Matheson says: “We need to ensure the Northern Powerhouse is all encompassing. Hopefully Science City will help.”
Regional regeneration
L&G’s investment in Science Central follows a series of commitments to back regional regeneration projects.
In January 2015 L&G formed a partnership with the Regional Investment Organisation, then part of inward investment body UKTI, to co-invest £1.5bn into pipeline projects. Alongside capital from other institutions and major overseas investors, it is hoped the new investment vehicle can attract an additional £15bn of investment into critical regeneration projects.
At the time the partnership was announced, Legal and General Group chief executive Nigel Wilson said: “We are well-positioned to work alongside UK and international money to channel funds into regeneration.”
L&G has so far invested almost £900m through the regeneration vehicle. In March 2016 it paid £250m for a 50% stake in Salford’s MediaCityUK and in August it acquired a £162m half-share of Thorpe Park in Leeds. A month later it announced it would pump £400m into Rightacres’ Central Square development in Cardiff.
