Terrace Hill announced this morning that the Baltic Business Quarter office space pre-let deal with energy giants N-Power will not proceed.
N-Power agreed to lease more than 100,000 square feet of office space in the £300m Gateshead development almost a year ago, in May 2008.
Adverse movement of the investment yields since then mean that the project will no longer be profitable; Terrace Hill has therefore made the decision to postpone that particular phase of the development.
The energy company had agreed to lease office space in three buildings of the development, with an option for a further 80,000 square feet.
Phillip Leech, Chief Executive of Terrace Hill said: “Our original strategy for the Baltic Business Quarter remains firmly in place and we continue to see ongoing good levels of interest from local, national and international occupiers.”
The Baltic Business Quarter is currently home to the regional offices of the Open University and an 180,000 square foot facility for Gateshead College which accommodates more than 15,000 students.
Terrace Hill will continue to work on potential pre-let opportunities.