Tony Cullen, property fund manager at FW Capital, explains how commercial property developers can access finance for speculative and non-speculative sites in the North-East…
Funding is the lifeblood of any development and the decrease in financial support from mainstream lenders is continuing to cause problems for commercial property developers across the region. Demand is high but the market has been held back by a severe undersupply of Grade A commercial space which is limiting inward investment and preventing many local businesses from scaling up to the next level.
Because of this, the North East Commercial Property Investment Fund has been set up to provide much needed finance. Managed by us at FW Capital and backed by the North East Local Enterprise Partnership (LEP), the £35m fund is helping developers bring forward schemes which otherwise might not be supported.
It provides investment to non-speculative and speculative developments which is something traditional lenders are unlikely to support in the current market.
It’s focused on creating Grade A commercial space, whether this is for offices, retail units, or manufacturing facilities.
Over the 15-year lifetime of the fund, we aim to have a huge impact on the region, creating 140,000 sq metres of Grade A commercial space, 5,600 jobs and leverage in up to £170m of private sector investment.
How does the North East Commercial Property Investment Fund work?
Providing loans between £1m and £7m for a maximum of five years, the fund can support a variety of developments.
These include industrial units, distribution facilities or office schemes located in the seven local authority areas of the North East LEP area: County Durham, Northumberland, Gateshead, Newcastle, North Tyneside, South Tyneside and Sunderland.
The developer doesn’t have to be based in the region, as long as the project is!
Schemes that qualify include refurbishment projects, mixed use developments, businesses extending and creating new offices, industrial and warehouse developments, and retail schemes such as trade counters and roadside developments.
It also supports phased developments as well as speculative schemes that need help getting off the ground.
It is available to commercial builders, construction firms and property developers for projects in the North East LEP area.
To further support developers, there is a £15m incentive pot administered by the North East LEP which might be available to support almost viable schemes.
Looking to the future
We’re delighted to be in a position to support the regeneration and re-invigoration of the North-East commercial property market.
Our region provides huge opportunities for businesses wishing to invest, with great transport links by sea, air, road and rail to all parts of the United Kingdom and the rest of the world.
Our team is in a fantastic position to help developers to rise to this challenge by providing access to funding to assist schemes that might otherwise not get out off the ground.
What about residential developments? We have been running the very successful North East Property Fund, in conjunction with the North East LEP, for several years.
Through this we can offer short-term loans from £250,000 up to £2m for residential and non-speculative commercial developments in the same geographic area.
This can provide up to 100 per cent of build costs for suitable schemes with repayment terms available up to two years.
Over the past seven years we have supported residential property developers with close to £50m of funding, facilitating over 40 developments.