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Our commercial property experts from the Newcastle office, Patrick Matheson, Partner and Ian Tew, Partner, shared their insights into how the North East's new devolution deal and Labour's policies could impact the region and create both opportunities and challenges for Newcastle's commercial real estate sector. 

Is devolution a game-changer for Newcastle? 

According to Patrick, the recently approved devolution package for the North East will likely be more transformative for the real estate sector than the change in the national government itself. "The biggest change we will see is not the new government but the devolution deal," he noted. Devolution grants the region more autonomy, giving local leaders the power to unlock funding for significant infrastructure projects that could fuel commercial growth. 

This represents a significant opportunity for the North East鈥檚 commercial property market. A regional mayor could lobby for investment in transportation, housing, and regeneration, particularly in post-industrial sites ripe for redevelopment. Such developments could stimulate the local economy and make the region a more attractive location for businesses and investors. 

What about government funding in Newcastle? 

Despite the optimism surrounding devolution, financing remains the most significant challenge. Ian pointed out that the success of any government policy ultimately depends on whether it can be funded effectively. "It's not just about policies; it's about having the financial resources to make them happen," he highlighted. 

This issue is particularly relevant when it comes to housing and infrastructure projects, where costs can quickly spiral. Even with policy changes aimed at boosting development, real progress will depend on whether these initiatives can secure sufficient investment. As Patrick succinctly said, "All roads lead back to cost." 

However, the devolution deal could offer a solution here. By enabling the region to access dedicated funding streams for infrastructure, it may help overcome the financial barriers that have historically slowed progress in Newcastle. Ian added that real progress can only come when these projects are backed by meaningful investment. 

Climate change and sustainability in the North East 

Both Patrick and Ian agree that addressing climate change could be a significant opportunity for the region, particularly given the region's role in renewable energy industries like offshore wind. Ian highlighted the importance of investment in sustainable development, noting that the North East's coastal location makes it uniquely positioned to benefit from green initiatives.    

"The region's existing industries, from offshore wind to sustainable manufacturing, align with Labour's climate goals, making this a potential growth area for commercial real estate," Ian explained. The UK government has recently committed nearly £22bn towards two "carbon capture clusters" located in Merseyside and Teesside. These projects, funded over the next 25 years, are designed to capture and store carbon emissions from energy, industry, and hydrogen production. The initiative aims to create thousands of jobs and attract private investment. Sir Keir Starmer, alongside key officials, emphasised that these projects would revitalise industrial regions and stimulate economic growth. 

With initiatives like Newcastle's clean air zone and a broader push towards greener cities, there's potential for the region to attract investment in sustainable buildings and infrastructure.  

Addressing regional disparities 

One of the Labour government's key promises is to tackle regional inequality, a longstanding issue in the North East.  

Patrick observed that while the government's ambitions are commendable, the success of any effort to reduce regional disparities will depend on practical implementation. "Governments often make decisions based on political gain, and while there is hope that Labour will deliver, it's action鈥攏ot rhetoric鈥攖hat will matter," he said. 

This rings especially true in Newcastle, where previous initiatives, such as the "levelling up" agenda, while positive in principle, struggled due to a lack of funding. Labour's historical ties to the region offer some hope, Ian emphasised: "The real test will be whether policies lead to 'spades in the ground'鈥攑rojects that create jobs, attract investment, and boost the local economy." 

Catalysts for growth: the ripple effect 

Developing large-scale infrastructure projects could have far-reaching effects for the North East鈥檚 commercial real estate market. Ian pointed to projects like the proposed Gateshead arena as an example of how a single development could drive broader economic growth. "If big projects like this receive the necessary support, they can act as a catalyst for further investment in hotels, restaurants, and retail, creating a ripple effect throughout the region," he explained. 

This domino effect is critical for Newcastle. Once a key project is underway, it creates a demand for complementary developments, driving growth across multiple sectors. For investors and real estate professionals, understanding how these opportunities connect is essential for capitalising on the region's potential. 

While government policies will undoubtedly shape the future, the true driver of change may come from the local level, where devolution provides the tools needed to unlock investment and development. 

For commercial real estate, the next few years will be pivotal, with the potential for significant growth driven by infrastructure development, climate initiatives, and a renewed focus on regional investment. 

How can our Newcastle team support you? 

Specialising in commercial and residential sectors, we're known as one of the principal commercial property consultants in the region and one of the leading leasing, managing, and investment agents. With 3 decades of dedicated service in the North East, we've played integral roles in the region's most prestigious projects, driving significant investments and employment growth. Get in touch to learn how we can support you. 

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