Wirral Council will spend £1.5m on paying rent for its new offices before the local authority even moves in.
Reports show the local authority will use £2m of profits from the Wirral Growth Company, a joint venture, to offset rents for the first phase of the Birkenhead Commercial District (BCD) and exit costs from the current offices it rents at the Cheshire Lines building in Canning Street.
The local authority recently completed the first phase of the BCD with the construction of two new office buildings, the Mallory and Irvine buildings, on Milton Pavements in Birkenhead town centre.
Policy and Resources committee documents in July showed it will use £1.5m to offset rents after building work finished and another £500,000 will pay for potential exit costs from Cheshire Lines.
The BCD is a plan to create “a new central business district comprising a mix of council and commercial offices that will add a civic function into the town centre as well as introducing jobs and significant footfall.”
The first phase was funded in advance by £75m from Canada Life Asset Management but even if the council cannot let the buildings, it will still have to pay rent on them for 35 years.
Wirral Council will pay at least £2.213m each year, though it plans to make money from this by renting out the office space and moving council workers into the Mallory building. These leases were agreed at the council’s final cabinet meeting in July 2020.
The council will spend at least £1.34m a year on the Mallory building from April 2024, though it expects to save money as leases for offices in Cheshire Lines come to an end.
For the second building, it still faces an £873,000 charge if it cannot find someone to fill the building by April next year according to its financial accounts for 2022-23. This charge has the potential to increase.
To get the new office building ready for council workers, the local authority is also spending more than £9m to fit it out and nearly £300,000 on insurance for the buildings for the next three years.
In its accounts, the council said it would develop a marketing strategy for the offices and they had one occupier interested. To prepare for any loss, it will also create a reserve as part of its budget for next year.
Green councillor Jo Bird, who sits on the local authority’s economy and regeneration committee, said, “We have asked for an update on agreed tenants and councillors haven’t been informed of any agreed tenants.
“We are told there is a marketing strategy but I haven’t seen any evidence of that apart from in the window of the office buildings themselves.”
A council spokesperson said, “Marketing of the Mallory and Irvine office buildings by the letting agent began in summer with further promotional activity continuing over the next 12 months.
“The financial benefits to the council will depend on the rents achieved from the letting of the available space and an assessment of any additional economic benefits that the offices bring to Birkenhead.
“It has been proposed that some of the profits from the Wirral Growth Company will be used to meet the costs of the office buildings over the initial two years, subject to agreement by the Policy and Resources committee. It is also proposed that when income from the offices is sufficient then consideration would be given to creating a reserve to manage future vacancies within the buildings.”
The final business case for the Birkenhead Commercial District was presented to the council’s former Cabinet in February 2020 and was “forecasted to produce significant development surplus.”
Wirral’s leader at the time Pat Hackett “stressed that it was an important milestone in Wirral’s regeneration journey, and would deliver benefits for the culture, environment and economy as well as benefiting Council finances.”
In response to criticisms of the BCD from Green councillors in 2023, Wirral’s Labour council leader Paul Stuart accused councillors of having it both ways, adding, “Try spending some time actually bringing up our borough instead of talking it down all the time.
“All we’re going to end up with now until the general election, Mr Mayor, is party political broadcasts from the Green Party at every possible opportunity and this is a complete and utter waste of our time and residents’ time.”