Purpose

Purpose:
To approve the letting at No.1 Bath Quays South, to a tenant. The principal terms, negotiated between the Councils agent, Knight Frank, and the tenant are attached in Exempt Appendix 1.

Background
Decision notices E2991 & E3085 approved the release of Commercial Estate Investment to secure delivery of new Grade A office accommodation at No.1 Bath Quays and for the Council to deliver the project to achieve regeneration benefits as well as revenue for the Council. The Decisions recognised that the revenue is needed to help the Council fund essential services whilst achieving its financial targets.

SMD papers E2991 & E3085 included an exempt internal business case setting out the case for intervention and modelled the anticipated financial outturn based on a target rental.

Previous Decision E2903 (May 2017), also noted the opportunity for the Council to deliver the project and referenced the role this could play in achieving the financial objectives of increased income for the commercial estate as well as helping to diversify the estate.

In recent years there has been an objective to rebalance the commercial estate portfolio with good quality office and industrial assets to reduce the reliance on the retail sector. This has been the premise underpinning the delivery of the new offices at No.1 BQS.

Decision

In connection with the marketing of No.1 Bath Quays South:

Approve the letting to a tenant of the ground floor east of No.1 Bath Quays South; the terms of which are in line with or exceed the internal business case approved by Decisions E2991 and E3085.

Approve the appointment of external solicitors to prepare and negotiate the terms of the Agreement for Lease and Lease between the parties, with a target completion of November 2023

Alternative options considered

The letting of No.1 Bath Quays South as a whole has been pursued as part of the letting approach. However previous larger requirements for Bath offices have dissolved. COVID and associated changes in working habits and economic uncertainty has led to a general reduction in space demand and the Councils agents have seen a change in demand to single or split floor formats.