WORK has begun to extend a Teesside business park which could lead to the creation of hundreds of new jobs.

Ashtenne Holdings announced plans to put in a series of new roads and services at the Durham Lane Industrial Park in Eaglescliffe describing the demand for new industrial units in the area as "buoyant".

The project will be very much a Teesside affair with the work itself being carried out by Middlebrough's Birse Construction. The aim is to extend the space for units to include another 70 acres of the park.

A spokesman for Ashtenne said: "We have given Birse the contract and work is underway on this speculative extension to the park."

Ashtenne, which yesterday revealed half year profits of £7.26m, up from £5.83m previously, holds £287m worth of properties producing an annual rental income of £25.9m.

An additional £1m a year in income is not yet flowing due to rent free agreements.

If its vacant units were let and existing leases reviewedto provide rents at current market levels, there is potential to see rent levels rise above £32m a year.

James Hambro, chairman of Ashtenne, said: "We view the industrial property sector as fundamentally stable with a good balance of demand over supply.

"Furthermore our focus on building regional teams, sourcing under-managed property and strong marketing to add and realise value, gives us the confidence that we can continue to make exceptional real returns in the industrial property sector."

During the half year Ashtenne revealed that net occupancy of its portfolio improved by 310,000 sq ft reducing the vacancy level by 17 per cent.

This compared with an improvement of 280,000 sq ft during the whole of 1999.

There were a total of 18 property investment sales totalling 991,00 sq ft bringing in £13.8m and there were eight property acquisitions costing £65.7m and totalling 2,144,000 sq ft.

In the previous twelve months Ashtenne purchased part of Teesside's business base in the form of the Cleveland Trust company, and also set up a regional base in Washington.

The extension at Eaglescliffe is being funded by development agency One NorthEast.