Agenda item

The Director of Estates and Building Services submits the Corporate Estate Annual Report for Financial year 23/24.

The City Mayor gave a brief introduction to the item, noting the following:

·       The corporate estate was a long-established element of the land and property portfolio that was not held for specific operational purposes. Specifics had been established under the local parliamentary act of 1956 and were incorporated from the 1971 local government act.

·       The capital portfolio was now worth over £100m which brought in significant revenue.

·       Continued reinvestments were required for maintenance and procurement purposes.

·       Previously, annual reports were produced, with this was no longer being the case, it was deemed appropriate to bring a report to formal scrutiny.

·       The Corporate Estate had enabled the development of Beaumont Leys and Hamilton. 

The Director of Estates & Building Services provided an overview of the report. Key points to note were as follows:

• Yields had improved year on year, and results compared favourably against the national benchmark.
• Acquisitions such as The Haymarket Shopping Centre and The Heathers Industrial Estate had significantly increased the value of the portfolio.
• The industrial sector continued to be the largest in terms of both area and value.
• Occupancy of the estate was at around 95%.
• There were challenges with city retail sites, but returns had remained high.
• Running costs had been heavily impacted by inflation in 2023-24, made worse by the energy bill increases.
• Gross income had increased to £11.27m. This was attributed largely due to performance at the Haymarket Shopping Centre and a structured lease review.
• Rents were moving in line with the market.
• Several assets had been repurposed such as the previous council office space at Phoenix House which was now let to external providers.
• The estate totalled 1.5% of council revenue.
• Debt had reduced dramatically and would continue to be tackled.
• The next annual report was upcoming.

The Chair welcomed questions from members. Key points to note were:

• Cost savings would always present a challenge. The aim was to grow the portfolio mindfully, with an emphasis on sustainability.
• In terms of Environmental, Social and Governance (ESG), there were nuances due to all of the different sectors covered. 
• When letting properties, it was vital to consider whether it would be suitable for the area and community.
• The service charge rate was not flat; instead, service charges in multi-let buildings reflected the costs specific to each building.
• Portfolio administration fees were considerably high. A new computer system had been invested in which would improve the day to day running.
• Asset performance was monitored, disinvestments occurred when appropriate.
• Ownership of The Haymarket Shopping Centre meant that there was no longer a lease payment for the carpark and that revenue now came to the Local Authority.  Also, leases were not required for the Sexual Health Centre and Haymarket Theatre.
• The Haymarket Shopping Centre was about 20% vacant. Community use had been popular.
• There were promising prospects for the City Centre with Loseby lane, vacant units were not expected to remain so for long.
• A breakdown of occupancy figures by area could be provided.
• Historically, key retail areas such as Beaumont Leys Shopping area, the Hamilton Shops and the St Martins shopping area had been possible due to the acquisition of the land.
• When considering lettings, security was sought, this could be in the form of a parent company or director guarantee.
• Cost cutting opportunities were a key consideration, the recovery of service charges was vital and capital bids to invest in the portfolio were made to reduce asset running costs.
• Figures for portfolio sites could be provided annually.

AGREED:

·       That the report be noted.

·       Examples of marketing strategies would be provided.  

·       A breakdown of occupancy figures by area be provided.

·       Figures for portfolio sites be provided annually.