Agenda item

The Director of Tourism, Culture and Investment submits a report updating Members on the Economic Regeneration Workspace portfolio, and specifically three projects to develop more workspace.  The Commission is recommended to note the report and comment as appropriate.

The Director of Tourism, Culture and Investment submitted a report updating Members on the Economic Regeneration Workspace portfolio, and specifically three projects to develop more workspace.

Councillor Myers, Assistant City Mayor Policy Delivery and Communications, who had responsibility for this portfolio, introduced the report, welcoming the support that workspace development gave to the support for businesses in different sectors.  He also welcomed the positive impact this would have on local supply chains and expressed the hope that it would increase investment in the city.

The Head of Economic Regeneration reminded Members that the development of grown on workspace adjacent to Dock was progressing well and was due to be completed in early 2021.  There already was good demand for space at that site.  Separately, a developer was converting the Gresham building, (previously used by Fenwick’s), to include flexible working space, the demand for which was likely to increase.  In general, workspace occupancy was remaining high during the Covid-19 pandemic.

A further workshop scheme at Pilot House on King Street had the potential to be a substantial scheme.  Its development was being led by the Council’s Estates and Building Services division, which would be developing a funding package for the project.  Current projections were that the workspace there could be available in 2022 – 23.

The Commission welcomed the ongoing success of this work and made the following points during discussion on the report:

·           50% of the workspace near Dock had been pre-let.  Did officers have any indication of what proportion of the workspace in the Gresham building and Pilot House developments was likely to be pre-let when the developments opened?

Response from the Head of Economic Regeneration:

Marketing for the space next to Dock had been launched, but marketing for the Gresham development had not started yet, as the building was not due to open until late 2021.  It was hoped that marketing for the Gresham development could start in early summer 2021.  However, space there would not be leased, as desks would be available to rent on an ad hoc basis.  Comparable schemes in other cities had been successful and it was hoped that this would be replicated in Leicester.

Development of Pilot House was at an earlier stage and the nature of the space to be provided had not been confirmed yet.

·           Commercial rents in retail spaces currently were high, so it could be beneficial to encourage use of this space by other sectors.  High rent levels and long leases were the result of market failure, in that they created barriers to entry to markets as new entrants often were not in a position to meet these costs or make a long-term commitment through a property lease.

Response from the Head of Economic Regeneration:

The Council brought forward schemes such as that to develop workspace where there was a market failure in provision.  It did not manage the retail offer in the city, so would have a different role in discussions on affordability of retails premises.

Response from Councillor Myers, Assistant City Mayor Policy Delivery and Communications:

A lot of developments needed retail input at ground level to make those developments viable, but this was a different offer to that being made in this instance by the Council.

·           Would providing the type of workspace proposed distort the market and lead to rents become excessive?

Response from the Head of Economic Regeneration:

Conditions attached to funding for workspace development did not allow the Council to offer the space at below market rent, as this would distort the market.  Investment by the Council usually was the first public sector intervention in regeneration areas, in order to increase investor confidence in that area and stimulate job growth in the longer term.

·           Clarification of what was meant by “demand research” and who had undertaken it was requested.

Response from the Head of Economic Regeneration:

A formal study had been commissioned earlier this year from an economic development consultancy, who looked across the city to establish potential demand.

The Council also maintained a list of enquiries received from people and businesses looking for space in the city, so it was known that a demand for workspace existed.

·           How many additional jobs had been created through the development of these workspaces?  What was the level of turnover?

Response from the Head of Economic Regeneration:

As these were pipeline projects, there currently were no jobs, and consequently no turnover, to report.  The actual number would depend on factors such as the type of business using the space and the number of employees, but it was likely that the numbers would be similar to those for existing workspace.

·           It previously had been suggested that some of the modern shops in Market Place that were scheduled for demolition could be retained as pop-up shops, with accommodation above.  This would contribute towards the creation of a thriving city centre, both in business terms and encouraging people to live in the centre.

Response from Councillor Myers, Assistant City Mayor Policy Delivery and Communications:

The Council wanted people to live in the city centre.  Approximately 10,000 people now lived there, which was a lot more than 10 – 15 years ago.  A good business model that improved quality of life and increased footfall to an increased number of businesses therefore was essential.

·           Consideration could be given to including a retail element and/or gallery space to the workspace being developed.

Response from Councillor Myers, Assistant City Mayor Policy Delivery and Communications

Good exhibition space already existed in the city, particularly in and near the Cultural Quarter, but also in other parts of the city, so had not been included in these projects.

·           There would be a number of empty premises in the city centre and neighbourhoods after the Covid-19 pandemic.  These could be used for a range of different uses, including pop-up retail use or business start-ups and work could be done with landlords to ensure that the number of vacant premises was minimised.

Response from the Head of Economic Regeneration:

The inclusion of workspace, pop-up shops and galleries all could be important in increasing confidence in an area.  Various grant schemes recognised this and the Council worked with partners, including through the Leicester and Leicestershire Enterprise Partnership, to achieve this.

·           Were other workspaces managed by the Council’s Estates and Building Services division? 

Response from Councillor Myers, Assistant City Mayor Policy Delivery and Communications:

The Council was a commercial landlord, so did rent a range of properties to businesses.  However, the workspace initiative was to meet a need caused by market failure and was not a purely commercial undertaking.

AGREED:

That the Director of Tourism, Culture and Investment be asked to:

a)     Keep this Commission updated on progress with the development of workspace in the city;

b)     Keep under consideration how new and emerging businesses can be supported, particularly in response to the changing threats and opportunities created by the current Covid-19 pandemic; and

c)      Request that a report be prepared by the Council’s Estates and Building Services division for the Commission at an appropriate time highlighting all of the workspaces managed by them and the Economic Regeneration service, highlighting the differences between them.