Agenda item

The Strategic Director of City Development and Neighbourhood Services submits a report setting out a summary of the performance of the Council’s Corporate Estate for the year ended 31 March 2022. The Commission are invited to note the performance of the Corporate Estate in relation to its key metrics and its contribution to the Council’s revenue budget; and consider the wider contribution of the portfolio in supporting the local economy, local businesses and communities, whilst minimising risk to the Council.

An Executive Summary is included before the full report.

The Strategic Director of City Development and Neighbourhood Services submitted a report setting out the performance of the Council’s Corporate Estate for the year ending 31 March 2022.

The City Mayor introduced the item, noting that the Corporate Estate was largely focused within the city itself and generated important revenue for the Council as well as often helping to serve regeneration in the city.

The Director of Estates and Building Service presented the item, it was noted that:

·         The portfolio value of the Estate had increased by £11m, this was mainly due to the purchase of the Haymarket Shopping Centre.

·         Retail holdings represented a quarter of the Estate, much higher than most other property portfolios.

·         Estate occupancy was currently at 95%, down from previous years but still very healthy. The turnover in managed workspaces following the pandemic was largely responsible for this change in occupancy levels. There was also a reduced demand for parking spaces.

·         It was typically lower value spaces going void meaning that there was a limited impact on the portfolio income.

·         The increase in running costs was proportionate to the increase in portfolio size.

·         Gross income had increased by 11.4% and net income had increased by 9.6%.

·         Voids represented under £100k in lost revenue.

·         The revenue from Haymarket Shopping Centre had been impacted by shortfalls in service charges due to inherited voids.

·         The smaller managed workspaces were in strong demand and supported small businesses.

·         Rents were aligned to the market with industrial units, but lower with retail units.

·         All spaces met energy efficiency standards and further work would go into improving energy efficiency.

·         The Estate represented 2.03% of the Council’s overall net revenue budget so was a low risk investment.

In response to questions from Members and Youth Representatives it was noted that:

·         Revenue from the Estate went towards supporting Council Services.

·         The Council’s Neighbourhood Services buildings and schools were not part of the Estate. There were properties in the portfolio which supported education such as the Leicester Castle which was currently rented out by DMU, and the Centre for Fun and Families also rented out space.

·         If traders were struggling then the Council would consider measures to support them.

·         Wygston’s House was a part of the Estate and the King Richard III Centre was partly in the Estate. Officers would check whether or not the rent prices could be disclosed.

·         Asset value was considered to be of less importance than the profitability of the portfolio as there was no intention of selling any assets.

·         It was hoped that when markets picked up that occupancy would go back to previous levels.

·         Employers still wanted presences in city centre offices, meaning that there was still a demand for office space. However the nature of that space could change with more people working from home.

·         Options were being considered around the possibility of bringing the Council office buildings that the Council was vacating into the Estate.

The Chair requested that a training session be set up for Members around the Corporate Estate.

AGREED:

·         That the current performance of the Corporate Estate be noted and that a briefing session be set up for all Members on the Corporate Estate.

·         That Officers check whether or nor rent fees for the Corporate Estate could be disclosed.