Plymouth is “Britain’s coolest little city by the sea” according to GQ magazine. And it has big plans.
In January, Plymouth City Council announced it would be investing £266m over the course of five years in a range of infrastructure, tourism and property initiatives to rejuvenate the city. The programme is underpinned by a £155m property investment fund and a further £95m has been earmarked for new commercial assets.
Across the UK, local councils have been plunging into the commercial property market or embarking on residential property development, made possible by low-interest loans through a government body, the Public Works Loan Board (PWLB), and have been highly acquisitive so far.
Nationwide, the motive is the same: to generate additional revenue to maintain services, aid employment and, in Plymouth’s case, help fund an ambitious plan to inject verve into the city in the run-up to the Mayflower 400 celebrations in 2020.
Another motivating factor is a change in local government funding rules. From 2020, local authorities will be allowed to keep 100% of their tax revenues from businesses, rather than the current 50% - incentivising them to promote growth in their local economies.
So how is Plymouth City Council taking advantage of this? And what are its ambitions?
Mark Brunsdon, head of strategic development projects at Plymouth City Council, points out that it would be remiss of the council not to grow its portfolio in today’s fiscal climate.
“We have invested £60m of the fund so far with £95m left in the pot for further acquisitions. This is a new asset fund with access to historically low-interest loans, which will enable us to control key city projects and generate additional revenue to fund the city’s ambitious £266m plan.
“It will also support the wider financial costs of the council, ensuring the delivery of economic and employment growth,” he says.
In June, Sol Zakay’s Topland Group sold the 200,000 sq ft Royal Mail centre in Plymouth to the council for £19.25m. This was preceded by the acquisition of Friary Retail Park, on Exeter Street, for around £24m.
Somewhat inevitably, this has led some to question whether councils are now property companies with a sideline in local government services.
We need to be entrepreneurial and look at other sources of revenue - Ian Bowyer, Plymouth City Council
Ian Bowyer, leader of Plymouth City Council, bats back such suggestions but concedes that councils are undertaking more property investment and development out of commercial necessity. “We are capitalising on our in-house property expertise and access to historically low borrowing costs to invest in commercial property in Plymouth,” he says.
“As we all get used to diminishing funding from central government, we need to be entrepreneurial and look at other sources of revenue. We are already landlords of a significant amount of commercial property and have a good track record in maximising returns from our property estate.”
Unlike other local authorities, such as Spelthorne Borough Council and Surrey County Council, Plymouth has invested all of the £60m spent so far in the local area.
“We will only be investing the fund on ‘home ground’, in assets we know very well and have confidence in,” Brunsdon explains.
Up to £27m is allocated in the capital budget to facilitate developments in the city centre that have already started or will get under way shortly, with a commitment of £55m for transport and infrastructure projects. There is an additional £41m earmarked to maintain and improve key city assets, including £20m on the city’s roads.
The proposed outlay is ambitious, as are the numbers the council wants to deliver: 2.6m sq ft of new employment space; 19,000 new homes; and 20,400 jobs. It is working hand in hand with the private sector to make developments viable by providing enabling works and swift planning decisions.
There are signs that the council’s work is already paying dividends. The 55,000 sq ft Plymouth Gateway Retail Park, which is being developed by Europa Capital and Ediston Real Estate, has pre-let ahead of practical completion next year.
“This was a park we acquired with a historic retail consent,” says Alastair Dickie, development director at Ediston.
“We understood from our market knowledge and intelligence that there was strong retailer demand and amended the design and consent, which allowed us to 100% pre-let the development to Wren, Mothercare, Tapi, Sofology, KFC and Costa.”
Dickie says the council’s planning department was “excellent” in dealing with and processing its applications. “That led to quick decisions and allowed us to secure the tenants in the knowledge that the required planning consents would be forthcoming.”
Plymouth’s retail reawakening has been boosted by the council’s working relationship with two of the city’s largest private stakeholders, British Land and Tristan Capital Partners.
European Property Investors Special Opportunities 4, a fund advised by Tristan, is investing £50m in the development of a major mixed-use project on the site of the former Derrys department store.
Plymouth Cross will see the old building demolished and replaced with 75,000 sq ft of retail and leisure space, a 500-bed student accommodation block and a 110-bed Premier Inn.
Plymouth Cross is fundamental to the regeneration and revitalisation of the city - Chris Webb, Tristan
Chris Webb, executive director - portfolio and asset management at Tristan, believes the injection of new leisure and retail offerings, as well as an influx of students to the centre of the city, will act as a catalyst for wider regeneration.
“Plymouth Cross is fundamental to the regeneration and revitalisation of the city, injecting not only new retail and leisure into the city centre, but also bringing new quality accommodation to the rapidly expanding student population. We are working closely with Plymouth City Council and the University of Plymouth to deliver the scheme.”
It has not all been plain sailing, however. Last summer, British Land had been on the cusp of beginning work on the hotly anticipated extension to Drake Circus shopping centre, for which it had received planning permission in 2015.
The project was put on hold when British Land decided to submit a revised planning application that included two fewer restaurants and changes to the layout of the cinema. Now, having received consent for the revised scheme, the £50m, 100,000 sq ft extension, which includes a 12-screen Cineworld cinema and 13 restaurants, is firmly back on track.
When it is finally delivered, it is expected to revitalise the city’s evening economy. A raft of leisure operators is set to sign up before construction begins before the end of the year, says David Pollock, retail development director, at British Land.
“Plymouth has a very strong local catchment and a vibrant and successful city centre, which will be further enhanced by our investment,” he says. “The leisure scheme creates an opportunity to take Drake Circus to the next level, and, with a number of new brands added, it is a very strong example of our strategy to create ‘places people prefer’.”
British Land is also helping to fund the development of a new coach station on Mayflower Street, after the council vacated the adjacent coach station at Bretonside to make the development viable.
There are further signs the council’s ‘roll-the-sleeves-up’ approach is enabling development.
It is on the verge of agreeing a deal with an as-yet-unnamed developer to deliver 180 residential units and 15,000 sq ft of commercial space at Colin Campbell Court.
Gordon Isgrove, regional senior director at GVA, which is marketing Colin Campbell Court, says: “The council took a very proactive view. They acquired significant portions of the site to help assemble the scheme; until then, it had stalled for over 15 years.” The demolition of 109, 111 and 113 New George Street - the first movement towards assembling the forlorn site into a £40m scheme - is now complete.
We want to make sure that we are ready for the national and international spotlight - Ian Bowyer, Plymouth City Council
Projects are moving ahead. And at just the right time. “We want to make sure that as the UK’s lead city in the commemorations of the sailing of the Mayflower in 1620 from Plymouth to the New World, we are ready for the national and international spotlight,” Bowyer says.
As part of the Mayflower anniversary commemorations, a £34m overhaul of Plymouth History Centre will be undertaken. Once complete, it is expected to attract an additional 220,000 visitors a year. The city itself is expecting to receive more than six million visitors in 2020.
The expected explosion in tourist numbers has prompted the council to expand the city’s hotel provisions. Work on the 1620 Boutique Hotel, for example, is under way.
Aided by £4.3m in government funds, a £50m redevelopment of Plymouth railway station, which is likely to include up to 150,000 sq ft of new mixed-use space, is also on the cards. And, in addition, a new cruise terminal, funded by the council, is expected to be complete by 2020.
These improvements are expected to attract new businesses to Plymouth, which is already home to a number of illustrious companies including Babcock, Becton Dickinson, Kawasaki, Princess Yachts International, The Wrigley Company and the Range HQ.
The city also boasts the highest concentration of manufacturing and engineering employment in the south of England, a student population of 35,000 and the largest naval base in western Europe.
“We are punching above our weight,” says Brunsdon. “However, values in the city are still low, so we are attracting investors. Rental rates are also lower in Plymouth than in comparable cities across the South West, and we have the second-largest population [in the region]. There is potential for significant rental growth.
“We want to grow, and we have the capacity to expand our housing stock, as we are not restricted by green belt around the city like Bristol.”
Plymouth may be a small city but its council has big ambitions. And if current investment and development activity is anything to go by, the city is set to become a more significant dot on the map.
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