Decision

The Director of Capital Programmes has approved the grant of a new lease, surrender of an existing lease and completion of any further legal documentation to enable the relocation of an existing tenant (‘The Tenant’) on the terms set out in this report and exempt appendix 1.

Reasons for the decision

In 2023 the Council purchased the Pyramids and Grange Shopping Centre from the Mars Pension Fund Trustees. The shopping centre is the primary retail core of Birkenhead. It has been in a state of decline over the last decade with the growth of online retailing, accelerated by the Covid pandemic. This led to significant vacancy within the centre. The Council’s actions in respect to seeking to regenerate Birkenhead town centre are aimed at activation of the high street to stimulate new retail, leisure and other commercial uses to encourage investment and spend in the local economy.

JLL in its role as Investment Manager has been working with the letting agents (Barker Proudlove and Emanuel Oliver) to maximise occupation through new lettings and tenant retention wherever possible, taking account of the Council’s regeneration ambitions.

The Tenant is currently ‘holding over’ on their existing lease. JLL and the appointed letting agents have negotiated a set of Heads of Terms on behalf of the Council for the relocation of The Tenant which will take a new lease on the relocation unit and surrender their existing lease as set out in the exempt Appendix 1. It has been agreed that the Tenant will take on responsibility for these works on the basis that the Landlord will reimburse the cost of undertaking these works.

Proceeding with the relocation without further delay is important to provide The Tenant opportunity to complete its relocation prior to the Christmas trading period towards the end of 2026, and the new lease will provide certainty over their occupation within the town centre for the foreseeable future. The Tenant is a national retailer with strong financial standing and plays a key role in supporting footfall and vibrancy within Birkenhead town centre.

Relocation will retain The Tenant within Birkenhead and will secure occupation of a unit which is vacant since 2018, providing a modern fit-out, reducing ongoing void costs and improving the overall perception of the shopping centre environment.

Allowing the Tenant to carry out the Landlord Enabling Works (which are required for any future letting of the unit) will reduce the risk of delays, help avoid extra costs for the Council and support The Tenant moving into the unit on time.

The detailed terms of the arrangement which is subject of this decision is set out in the exempt Appendix 1.

Appendix 1 contains exempt information as defined in Schedule 12A of the Local Government Act 1972.  It is in the public interest to exclude the press and public under Paragraph 3 ‘Information relating to the financial or business affairs of any particular person (including the authority holding the information)’.

Alternative options considered

The ‘do nothing’ option would likely result in The Tenant exiting Birkenhead completely, as the Tenant has stated that it does not wish to remain in its existing unit. This would add another empty unit to the town centre resulting in additional costs incurred while the property is vacant and impacting the perception of the vibrancy of the town centre. 

The Council could continue to market the vacant relocation unit in the open market to seek an alternative tenant, however the space has been marketed since 2018 with limited interest. A letting to a different tenant might leave Council responsible for the annual void costs. Additionally, a letting would not be possible given the vacant unit’s current condition and configuration, and so the cost of the Landlord Enabling Works would need to be incurred at a future date to facilitate any letting and that would be subject to further cost inflation. 

Council-led delivery of the Landlord Enabling Works to the vacant relocation unit was rejected due to procurement complexity, delays before work could begin, increased cost risk and additional project management costs.

The relocation unit is not currently in a lettable condition. One option discussed was for the Council to undertake an agreed set of Landlord’s Enabling Works, prior to the Tenant taking possession, however due to potential issues, timings and delays with some of the elements (including asbestos/boiler removal and the works to the goods lift) this option was rejected.