Report of the Strategic Director (Growth and Development)

This report provides an update on property activity since the last Annual Property Report to Resources and Governance Scrutiny Committee in November 2018. It reviews activity across the Development Team, including the Investment Estate; the Operational Estate; and the Heritage Estate. The report includes an update on the specific areas requested in the Scrutiny Committee’s work programme, including the Council’s Asset Management Strategy (whole lifecycle cost and maintenance, including public realm); and governance of land transfers and Community Asset Transfers.

The Committee considered a report of the Strategic Director (Growth and Development), which provided an update on property activity since November 2018.   The report reviewed activity across in Development and the Investment, Operational and Heritage estates.  The report also included an update on the Council’s Asset Management Strategy and governance of land transfers and Community Asset Transfers (CAT).

The main points and themes within the report included:-

·                The delivery and operation of the Council’s Digital assets which included The Sharp Project, Space Studios Manchester and Arbeta (previously One Central Park);

·                The on-going development of Manchester Airport and Enterprise Zone;

·                The development of City Centre schemes involving Council assets which included First Street, Jacksons Row/Bootle Street, St Johns, Heron House, Mayfield Regeneration Area, Circle Square, Portugal Street East and Bridge Street and Kendals;

·                Details of other commercial and employment development, including Central Retail Park, Didsbury Technology Park, Central Park and New Smithfield Market;

·                Work with Strategic Housing, Planning and other partners to deliver the Council’s objectives for Housing;

·                Involvement in a range of initiatives to improve the quality and offer in district centres

·                Property input in relation to leisure, sport and education provision;

·                The management of a programme of strategic acquisitions

·                Income from the Council’s investment estate, particularly from its property interests in the Airport

·                The management of the Council’s non-operational (investment) estate and transactional work;

·                An overview of the Operational Estate activity and Asset Management Programme;

·                Progress with the Council’s Carbon Reduction programme; and

·                Updates in relation to Community Asset Transfers and Voluntary Sector Support and the Council’s Heritage Estate.

Some of the key points that arose from the Committees discussions were:-

·                Had the process of Community Asset Transfers (CAT’s) slowed down and if so what was the reason for this;

·                It would be useful if all Members of the Council were provided with details of buildings across the city that were still available for CAT’s;

·                Why was it envisaged that there would possibly be a need to progress sales of Council assets quickly if demand from investors and occupiers particularly in the residential, office and leisure sectors within the city centre remained strong;

·                Clarity was sought as to what was determined to be “affordable” in the context of housing development within the city;

·                It would be helpful in future reports to have a breakdown of the different types of housing provision being provided across the city;

·                In relation to the proposed housing renewal scheme in Beswick, what was meant by the reprovision of all existing social housing tenants;

·                Given the Council’s exposure to the retail sector, with specific reference to Kendals and the Arndale Centre, was there any concern in relation to  the retail performance of the city;

·                What was the timescale for actual movement on the proposals for the redevelopment of Wythenshawe Town Centre;

·                Why had the Council paid £37million to acquire Central Retail Park site but was selling a site in close proximity (Pollard Street) to this for significantly less;

·                There was concern that there appeared to be a significant change to the proposals for the future use Central Retail Park which were different to the initial proposals for mixed use residential housing provision;

·                There was concern in relation to the change in use of some new developments from initially residential provision to commercial provision  and the possible shortage of homes for owner occupation;

·                There was concern in relation to the delay in progress with Upper and Lower Campfield Markets;

·                Clarification was sought as to whether the requirement to absorb vacant business rates liability within the Head Lease with the Arndale Centre was contained in any other Head Leases that the Council had and was there a risk to the Council with the creation of other high value retail propositions across the city that the Council would potentially need to absorb more of these;

·                It was suggested that the Council received a future report detailing its heritage assets and how these could be enhanced; and

·                Was there anything that had not gone as well as aniticpated.

The Head of Estates and Facilities confirmed that the process of CAT’s had slowed compared to previous years and this had been as a result of less stock being available now and the stock that remained, was complex and required more work in terms of developing the businesses cases.  The Deputy Leader commented that information was available on CPAD in relation to buildings that were available to a CAT but agreed to send this information directly to all Members of the Council.

The Strategic Director (Growth and Development) advised that in terms of the  development cycle and the disposal of land and property, there was a clear view within the market that difficult times were approaching, which was being reflected in terms of land values in the city resulting from  the uncertainty of Brexit and the country’s global trading position.  There was also evidence of land traders offloading land which was a concern.  Taking a wider perspective, he reported that demand was still strong within the city for commercial space.

The Committee was advised that the Council had realigned its policy framework on housing and affordability so that this was now in line with the Council’s new Affordable Housing Policy which was approved by the Executive in September 2019.  In essence this meant that future disposal of land needed to promote properties for social rent, affordable rent and shared ownership.  The Leader commented that the term affordable had been coined by Government and was used in a specific way and was a definition of affordability never accepted by the Council.  Instead the Council determined affordability in the context of a family at or below the mean income for the city, were a maximum of 30% of income was spent on housing costs.  He suggested that an alternative description of affordability should be adopted.

The Strategic Director (Growth and Development) advised that he would seek clarification form One Manchester in relation to the proposed reprovision of all existing social housing tenants in connection to the proposed housing renewal scheme in Beswick and provide a response to the Committee.

The Leader advised that the Council was due to meet with representatives of Kendals to discuss the future plans for the department store.  In terms of retail in general, there were numerous national and international chains that were struggling, however, independent retail in the city was flourishing and there was also an increase in online businesses establishing a physical presence within the city, with reference Amazon Market Place and the Hut Group being given.  Taking all this into account, it was considered that Manchester was able to offer a thriving retail offer.  The Strategic Director (Growth and Development) commented that the impact of what was happening at a national level in the retail market was having an impact on the Council’s income from the Arndale and Wythenshawe Town Centre.  In terms of movement on the proposals for the redevelopment of Wythenshawe Town Centre, there was imminent discussion to take place with local members on the proposals.

The Strategic Director (Growth and Development) reported that both Central Retail Park and Portugal Street East schemes had been subject to independent valuations by agents and were very different schemes.  The Pollard Street scheme had a major challenge in terms of development due to an operational tram line running through the centre of the scheme which placed a considerable impact on the valuation of the land in terms of development which was reflected in its valuation.  It was also a low density scheme, whereas Central Retail Park did not have the same type of development challenges and was a higher density scheme.  It was also commented that the value of Central Retail Park had been based on its current use a retail park.  In terms of the proposals of Central Retail Park, he advised that the Council was in the final stages of preparing a strategic framework for the use of Central Retail Park which would submitted to a future meeting of Economy Scrutiny and that the Council had other land interest around Central retail Park which might be more suitable for future affordable housing provision

The Strategic Director (Growth and Development) advised that the broad numbers of proposed housing at a city level that were forecasted to be built as part of the Council’s Local Plan and within the GMSF had not changed but acknowledged that the provision of owner occupied properties was an issue that needed to be looked at.  The Leader gave an assurance that Deansgate Ward Councillors would be kept updated on the progress with Upper and Lower Campfield Markets and St Johns as they developed.

It was reported to the Committee that the requirement to absorb vacant business rates was bespoke to the Head Lease with the owners of the Arndale.  It was acknowledged that if there was another major retail development in the city centre there would be a need for the Council to be cognisant of the potential impact this would have.

The Deputy Leader reported that a lot of heritage buildings in the city were not owned by the Council and therefore it was not possible for the Council to enhance these.  The Chair advised that she would consult with the Chair of Communities and Equalities Scrutiny Committee about a future report on the governance structure of how heritage assets were looked after.

In terms of what had not gone so well, the Strategic Director (Growth and Development)  advised that there will still outstanding issues around the Investment Estate over and above the issues in relation to the Arndale and Wythenshawe Town Centre and gave reference to complex issues around 103 Princesss Street and Heron House which impacted on the Investment Estate.

Decision

The Committee:-

(1)       Notes the report; and

(2)       Notes that the Chair will consult with the Chair of Communities and Equalities Scrutiny Committee about a future report on the governance structure of how heritage assets were looked after.