Decision details

To authorise a revised scheme for the project.

Referring to minute 142 of 9 February 2016, the Cabinet considered the report circulated with the agenda.

Mrs Keegan introduced the report, and reminded the Cabinet of previous consideration of this project. In June 2015, the Cabinet had approved a budget for the demolition of the existing building and redevelopment of this site with a single unit, subject to a pre-let agreement being in place before the new unit is built. Unfortunately, marketing of the site has failed to secure such a pre-let agreement. However, an offer had been received from a developer proposing to take a long lease to construct a five unit speculative industrial scheme. The Council had commissioned a market overview report from a local commercial agent whose report indicated that there was good demand for such units. It was, therefore, proposed that the Council should itself proceed with the development of a five-unit speculative development, but in two stages – initially to draw up a detailed design, obtain detailed planning permission and tender for construction, to be followed by a further report to Cabinet on current market conditions and expected return on investment before proceeding with a construction contract.

Mr Harrison (Strategic Asset Management Surveyor) added that, even if market conditions worsened and some units became hard to let or rents reduced, the expected return on investment was better than cash on deposit or the local authority property fund.

RECOMMENDED TO COUNCIL

(1)  That funding of the amount set out in recommendation 2.1(i) of the report be released from Capital Reserves to enable the detailed design, planning matters and pre-construction tender process to be progressed for a five unit scheme.

(2)  That the balance of the estimated total project cost is allocated from capital reserves and that, following the tender process, a report is brought back to Cabinet to review capital costs, return on investment, and prevailing condition of the property market before the budget is released to enter into a construction contract.