LB142 p60-65

Newcastle real estate

March 2004 Legal Business 61

Prime TyneWhen Liverpool pipped Newcastle and Gateshead for

Europe’s Capital of Culture 2008, the North East went

into shock. Tyneside and its lawyers are simply redoubling

their efforts to change the skyline and much more

MARIA SHAHID

A MIXTURE OF DEFIANCE ANDannoyance tinges any conversation with aGeordie regarding the recent competition tobecome European Capital of Culture 2008.Newcastle and Gateshead’s near miss of thetitle to Liverpool hit a sour note locally. ‘Wewere robbed,’ one Newcastle partner sums up.

The disappointment is understandable;Tyneside is in the midst of a cultural renaissance. The stunning spectacle of the ‘winking eye’ Millennium Bridge greets train travellers as they cross the Tyne, while the Baltic Exchange, a formergrain warehouse, part of the former Baltic Flour Mills that now houses a constantly changing display of contemporary art, is visible on Gateshead’sQuayside. The Sage Music Centre, designed in Sir Norman Foster’s signature-style, all gleaming glass curves, is alsostarting to take shape and will, when open, have a 1,600 capacity concert hall asits centrepiece.

Newcastle’s Quayside, meanwhile, is buzzing with business and leisure

visitors, housing law firmsDickinson Dees and WardHadaway, as well as a mixtureof hip hotels, bars and restau-rants. Comparisons withCanary Wharf are not as far-fetched as they may initiallyseem. ‘The Quayside hasbecome a self-sustainable partof the City,’ enthuses MalcolmLloyd, a partner at WardHadaway, one of the first lawfirms to relocate its offices tothe area.

Sir Ian Wrigglesworth ischairman of The NewcastleGateshead Initiative, the destination marketing agency for the region. He wascharged with overseeing theCapital of Culture bid. Wrigglesworth points out that the agency had launchedits campaign to ‘raise the consciousness of the area’ long >

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62 Legal Business March 2004


Location is keySheltered from London’s morefickle economic cycles, theregion’s self-contained realestate market is flourishing inthe wake of this urban renais-sance. Wrigglesworth is alsoexecutive chairman of UK LandEstates, one of the most activereal estate players in the localmarket. Both the company andits chairman typify the locallydriven investment in the area.One of its most recent projectswas the acquisition of regionaldevelopment agency One NorthEast’s £120m industrialportfolio. With a strong loyaltybeing shown to local businesses,the region’s law firms arewinning the sort of instructionsthat many London real estatefirms would clamour to do. UKLand Estates instructed its long-term adviser, Eversheds’Newcastle office, on the OneNorth East deal. ‘The North Easthas a very strong regionalidentity, with loyalty to the

before any consideration had been given to the 2008 title. ‘We needed to improvethe profile of the area,’ he explains. ‘Thecampaign was based around the tremendous potential of the region.’ Hispride is palpable as he notes that ‘there has been an incredible growth in confi-dence over the last five years. Business and leisure activity has gone up dramatically in that time’.

local firms,’ Wrigglesworth notes. ‘The lawfirms in the city provide a first-class service.’Eversheds is still the only national firmwith a true real estate presence in the city.

Although Wrigglesworth concedes thatmore competition between the law firmswould be welcome from a cost perspective,it seems unlikely in the short term. Alongwith Eversheds, there are three other heavy-weights – Dickinson Dees, Ward Hadawayand Watson Burton – dominating the city’sreal estate scene for larger projects, alongwith up and coming Robert Muckle.

Supply and demandIn contrast to the evolution of other com-mercial centres across the UK, Newcastle’sDickinson Dees, Ward Hadaway andWatson Burton are content, for the timebeing at least, to forego a national presencein favour of reinforcing their ranks locally.‘We’re wedded to the region,’ declares IanWard at Dickinson Dees. The firm’s clientbase, encompassing the likes of Bellway andHanro, typify the local owner-run business-es and private investors that predominate inthe market. ‘We’re not flush with Plcs inthe North East,’ Watson Burton’s RichardFreeman-Wallace notes wryly. (Indeed the

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Aside from Eversheds, three local firms havecome to dominate the legal scene in Newcastle –Dickinson Dees, Ward Hadaway, Watson Burton.All have experienced phenomenal growth overthe last few years.

Dickinson Dees’ meteoric rise over the last sixyears has seen the firm become one of theregion’s largest law firms, with a staff of over 700and compound growth of 15%. In common withits local rivals, the firm has eschewed mergerwith a large national firm in favour of a single-sitestrategy. ‘We don’t need to be anywhere else atthe moment,’ marketing partner Mark Warwickcomments. The firm’s policy of growing nationallyfrom Newcastle, aided by its lower cost base, has paid off handsomely: new clients include The National Trust and London Electricity.

Despite Dickinson Dees’ intimidating grip onthe local market, along with rivals Watson Burton,Ward Hadaway and Eversheds, Warwick believesthat there remains room in the city for nationalfirms prepared to invest in niche areas, citing the

example of Irwin Mitchell. ‘Newcastle’s legalmarket is still relatively under-resourced,’ he said.

It is not a view shared by all. Malcolm Lloyd atWard Hadaway is of the opinion that ‘Newcastle’slegal players have a strong foothold on the localmarket, leaving little room for outsiders’. As aformer managing partner and head of property atPinsents in Leeds, Lloyd believes that there arecomparisons to be drawn with Leeds, where the‘Big Six’ – comprising Addleshaw Goddard, DLA,Eversheds, Hammonds, Pinsents and WalkerMorris – have come to dominate. ‘Competitionbetween firms drove the growth in the Leeds legalmarket,’ he explains. ‘We are now experiencingthe same legal revolution in Newcastle ashappened there.’

Ward Hadaway is a relative newcomer to theNewcastle market. Established in 1988, the firmnow boasts around 300 staff, with a turnover of£16.5m in 2003. Lateral hires – such as that ofLloyd and his Pinsents colleague, propertylitigator Alan Herbert – have played a key part in

the firm’s growth, as managing partner JamieMartin explains. In common with Dickie Dees,the firm has pursued a single-site strategy fromits Quayside headquarters, and is currently inthe process of closing its South Shields office.Although frequently the subject of merger spec-ulation, Martin is adamant that ‘a key plank ofthe firm’s strategy is to remain independent’.New clients for the firm include North YorkshireCounty Council.

Watson Burton completes the local trio who arenow making their mark on the local market. Thefirm has achieved growth of over 20% during thelast three years with a number of significantpartner hires, including Freeman-Wallace whojoined from Ward Hadaway in late 2002 and, morerecently, IT and insurance lawyer Anthony Brown,from Eversheds. The firm’s real estate departmentalone has grown from 10 to 18 fee-earners in lessthan 12 months, and has seen an increase in feeincome of 17.3% by winning a number of signifi-cant new clients, including Allied Irish Bank.

FROM HUMBLE BEGINNINGS… THE LOCALS

The Baltic Centre for Contemporary Art


64 Legal Business March 2004


North East only has an eighth of thenumber of Plcs that operate from Leeds, thenearest major commercial centre.)

Freeman-Wallace freely admits thatNewcastle’s regeneration has brought with ita huge amount of work for the firm’s realestate department, which saw a 15% increasein turnover in 2003. His firm is currentlyinvolved in a £65m mixed-use schemeentitled Trinity Gardens, on the EastQuayside, a stone’s throw from the Millennium Bridge, on behalf of Silverlink.The developer has already pre-let 60,000 sq ftof office space at the site to Dickinson Dees.Freeman-Wallace explains that the pre-let isindicative of the quick take-up of offices,which is prevalent in a city where good officespace is still in very short supply. Led bydemand from government and professionalbodies, such as law and accountancy firms,looking to relocate, some commentators arepredicting that office rents in the region willhit the figure (relatively high for the region)of £20 per sq ft in 2004. ‘Good office spacesimply walks,’ Freeman-Wallace enthuses.

At Robert Muckle, partnersJonathan Combe and BarneyFrith make no bones about thefirm’s concerted push in realestate. It hired seven additionalfee-earners over the course of2003, motivated by anunusually buoyant local market.The firm noted a 50% increasein turnover in 2003, and isaiming to increase this by afurther 25% over the comingyear. One of its main clients is local developer City &Northern, which the firm is representing on a mixed-usedevelopment at MetroRiverside, Gateshead.

Generating outside interestRobert Muckle is also currentlyacting on behalf of Irishinvestor McAleer & Rushe on 1 St. James’ Gate, which is dueto be occupied imminently by

accountants Baker Tilly, and fellowNewcastle law firm, Watson Burton.

McAleer & Rushe is one of a number ofoutside developers to be showing aninterest in the region. ‘The property marketin Tyneside has transformed,’ Wrig-glesworth notes. ‘There was hardly anycompetition when we first started. Now,when any land becomes available it is hotlycontested.’ Land Securities is just one of agrowing number of national heavyweightsthat has shown an interest in the region,with its £75m retail/leisure complex knownlocally as The Gate. London & Regional is similarly involved in a residential development on the western Boulevard inNewcastle, while Chelsfield is understood tobe buying up land, to the south of the mainretail area on Northumberland Street in thecity centre, in phases. One estimate is that20%-25% of the money being invested inthe city’s real estate is now coming fromnational, as opposed to local, sources.

Interestingly, both Land Securities andChelsfield have remained loyal to theirLondon-based advisers on these deals. Whilstlocal lawyers admit that securing instructionsfrom one of the large nationals would be adefinite coup, they remain confident of theirstrong foothold on the Newcastle market. ‘A Geordie businessman would ratherinstruct a local firm,’ comments WardHadaway’s Lloyd. ‘There is a pride in doingso.’ He adds that with local players retrench-ing and expanding it leaves little room in the market for outside competition. In anyevent, with the added advantage of a lowercost base (partner charge rates compare veryfavourably with most cities at around £220an hour), many believe that it is only amatter of time before Newcastle firmsestablish the necessary credentials with thenational players, to secure their instructions.

Gateway to the NorthWhilst the East Quayside kick-started theregeneration of Newcastle, other areas, both

‘The property market in Tyneside has transformed. There washardly any competition when we first started. Now, when any landbecomes available it is hotly contested.’ Sir Ian Wrigglesworth, Newcastle Gateshead Initiative

Norman Foster’s Sage Gateshead is starting to take shape

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March 2004 Legal Business 65


in and out of the city, are now being eyedup with interest by developers. Notableamongst these is Gateshead, long consid-ered Newcastle’s poor relation. More knownfor its industrial heritage, the area is nowundergoing a major facelift.

Newcastle and Gateshead’s joint bid forthe European Capital of Culture has hadlong-term benefits for the region.‘Gateshead is five to ten years behindNewcastle in terms of its regeneration, butit has some exciting times ahead,’ Lloydnotes. Whilst the area’s redevelopment wasinitially being culturally led – with projectssuch Antony Gormley’s Angel of the North,Baltic The Centre for Contemporary Art and The Sage Gateshead music centre, all

Collingwood Properties on the develop-ment of a 250-bedroom Hilton Hotel overlooking the Tyne, which will also houseconference facilities.

Confidence buildingNewcastle and Gateshead’s new found con-fidence is evident in their determination topress ahead with the regeneration of thearea, despite losing out on the 2008 title.‘Culture 10’ is a £140m programmelaunched by the Newcastle Gateshead Initiative; the target being to continue withthe regeneration of the region, aiming todeliver 24,000 new jobs and £1.2bn ofincome by 2010. In addition, as one of thecities shortlisted for the title, Newcastle andGateshead have been designated as a‘Centre of Culture’ for 2008, along withBirmingham, Bristol, Cardiff and Oxford.

It bodes well for lawyers. The region’sinfectious optimism has noticeably changedperceptions both locally and nationally.Recent surveys indicate that the brain drainbeing suffered by most northern citiesduring the last few decades has started toreverse in Tyneside: law firms are having notrouble in attracting and holding on totheir brightest recruits.

Wrigglesworth believes that the culturally-led regeneration of the region has kick-starteda turnaround in its economic fortunes too,although he acknowledges that it still has along way to go. Lloyd at Ward Hadaway bestsums up the optimism of local law firms:‘There’s definitely a huge potential for growthand consolidation – Newcastle is a veryconfident place right now.’

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housed on the Gateshead sideof the Tyne – both the Quayside and the area behind itare now awash with develop-ment projects. Nationaldeveloper Terrace Hill Group iscurrently constructing the£250m Baltic Business Park.Terrace Hill has retained itsusual City-based adviser,Denton Wilde Sapte, for theproject. However, it isDickinson Dees that is advisingGateshead MetropolitanBorough Council on the samebusiness park, while WatsonBurton is representing local firm

Firm Key partners Key local real estate clients Key local deals in 2003/2004Dickinson Dees Ian Ward (head) Hanro Group Ltd Hanro at Citygate Phase 2 on the pre-let of the landmark

Gateshead Metropolitan Borough Council building to the First Secretary of State. Baltic Business Park on behalf of Gateshead Metropolitan Borough Council.

Eversheds Adrian Stanley (head) One North East One North East on the £120m disposal of its property portfolio.Adrian Hill UK Land Estates Plc

Ward Hadaway Neil Robson (head) Sage UK Ltd For Sage on its multi-million pound new headquarters building at Malcolm Lloyd Barratt Homes Plc Great North Park, Newcastle.Lesley Fairclough

Watson Burton Richard Freeman-Wallace Silverlink Property Developments Plc The £65m mixed-use development of Trinity Gardens onCollingwood Developments Ltd Newcastle’s Quayside on behalf of Silverlink.

Robert Muckle Jonathan Combe City & Northern Projects Ltd City & Northern’s mixed-use development of ‘Watermark’ at Metro Barney Frith Riverside, Gateshead.

NEWCASTLE REAL ESTATE: THE MOVERS AND SHAKERS

Gateshead Millennium Bridge, known locally as the ‘winking eye’


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