Purpose

Capital works are to be undertaken to meet the
requirements of a large retailer taking occupation of these vacant
units

Content

There had previously been negotiations with a supermarket
occupier to secure tenancies on Units 1-3 in Vale Retail Park and
the Vale Retail Park revenue budget was set on the assumption that
they would be in place by October 2023, providing rental income and
picking up rates and utilities costs. 
As the deal did not happen there was an in-year Revenue pressure in
Property budgets, currently being met by a Voids
contingency.
 
Units 1-3 had been re-marketed for over 6 months, following
the previous prospective tenant walking away from the transaction
as a result of a change in the company’s acquisition
criteria. In total, the three units had been vacant for over 2
years. Units 4 and 5 were let to tenants with good quality
covenants.
 
Following the remarketing of the site, there had been
limited interest in the property being let as individual units as
well as a whole block. Negotiations had been undertaken with a
supermarket occupier for Units 1, 2 and part of 3, however the
terms were appearing unviable in respect of the proposed income and
capital expenditure, along with issues in agreeing the enabling
works. Heads of Terms had been agreed in principle (subject to
Council approval and contract) with the supermarket occupier to
take all the available space.
 
The Managing Agents (Carter Jonas) had advised that Units
4-5 had indicated that they would be inclined to exercise their
right to break unless there was progress in letting the vacant
units. Without complimentary occupiers on the Estate, the lack of
footfall could result in the Tenants reviewing their options and
vacating, resulting in further pressures on the Property Budgets.
The focus was to secure new leases on the Retail Park to further
reduce the voids, loss of income and holding costs.
 
Securing the Tenant would require the Council to undertake
capital works to the property to reconfigure the existing retail
space, providing a shell-and-core unit ready for the Tenant to take
occupation and undertake their fit-out. Additionally, the Council
would be providing a garden centre to
the side elevation of the unit. Outline detail of the works
including costs were included in the confidential
appendix.
 
The supermarket was currently in positive discussions with
the Planning Department, who were providing a helpful steer in
order to achieve full permission to go ahead with the proposed
works.
 
RESOLVED –
 
(1)              
That the Council enters into an
Agreement for Lease on Units 1-3 in
Vale Retail Park which is in line with the
Financial Plan (MTFP)
income target.
 
(2)              
That
authority be delegated to the Service Director of Property and
Assets, in consultation with the Cabinet Member for Accessible
Housing and Resources, to enter into the Agreement for Lease,
including the commitment of a capital sum of funding for the
enabling works.
 
(3)              
That a supplementary budget
change to the Capital Programme be APPROVED, to use a capital sum
from the Investment Property Reserve to fund enabling works on
Units 1-3 in Vale Retail Park.