City council approves record investment in local economy

Newcastle City Council has approved a proposal to purchase the Tower at the Regent Centre in Gosforth and let it to green support services company eaga in a multi-million pound property deal, one of the largest by a local authority since the downturn began.

This move will retain up to 2,000 jobs here in Newcastle, including up to 500 new jobs through Eaga’s expansion activities, delivering a major boost to the regional economy. The proposal is a commercial property transaction which will be funded by prudential borrowing, with the financing charges being fully funded from the rental income, with surplus income generated in future years.

It represents value for money in property terms and a sound commercial investment for the council. It will also stimulate the wider economy and help mitigate the impact of the economic downturn on the region. The plan will boost the commercial property sector, enhance the city’s ambition of becoming a key location for knowledge intensive business services and increase the number of global organisations locating their headquarters in the city.

It is proposed that Eaga will occupy the majority of the 120,000sq ft building on Regent Farm Road in Gosforth, which was completed in November 2008 and put on the market by Northern Rock in September 2008. The council will grant the lease to Eaga for a period of 25 years at a market rent.

Barry Rowland, acting chief executive of Newcastle City Council, said: “It is important to not just sit back and wait for the upturn to come. We are using our ability to invest to retain and create jobs and stimulate growth in the wider economy and to help the city region through a very challenging time.”

Paul Varley, Managing Director of Eaga’s Managed Services Division, said: “This will undoubtedly aid our growth plans in existing and new markets but as a green support services provider our primary goal is to minimise our impact on the environment. Moving our people into these energy efficient new offices allows us to expand as a company but also reduce our carbon footprint at the same time. Newcastle Council share this goal and I’m delighted that our relationship has enabled this opportunity to come to fruition – I’m sure the added comfort for staff will also be welcomed.

 “The company now has almost 5,000 staff in operations throughout the UK and from bases in Ireland, India and Canada. More than 1,500 are based here in the North East, reflecting the company’s roots and commitment to this region.”

Alan Clarke, One North East Chief Executive and Chairman of the Northern Rock Response Group, said: “Eaga is a real North East success story and their move into this high profile location is further proof of their commitment to the region and future business growth.

“As chairman of the Northern Rock Response Group, I’m especially pleased to see the tower building being put to such good use and I applaud Newcastle City Council for its foresight and commitment in securing this 
quality office location.”

Eaga approached the council when the two organisations became partners in a joint venture vehicle called Newco in March, to see if there were benefits in sharing office accommodation and services.

The partnership is seeking to capitalise on a market for contracting out services like payroll, benefits and council tax payments, IT and customer service by developing business opportunities together 
and competing for contracts.

Contact information:
Nigel Whitefield, 0191 211 5097
nigel.whitefield@newcastle.gov.uk
www.newcastle.gov.uk