Decision details

Approval was sought for the acquisition of the leasehold interest in Kings Square Shopping Centre, West Bromwich.

Approval was also sought for the Director of Regeneration and Growth to be authorised to  undertake a procurement process and appoint  a specialist firm of management surveyors to manage the centre on the Council’s behalf.

The Chair of the Economy Skills Transport and Environment Scrutiny Board enquired whether strategic finance was asked to conduct an appraisal of the proposal.

On behalf of the Cabinet Member for Regeneration and Growth, the Cabinet Member for Community Safety stated that the acquisition of Kings Square was part of the West Bromwich Retail Diversification Project within the government-funded Towns Fund Programme.

Due to the number of Business Cases required to be submitted to government within a short timescale, Cabinet agreed that the completion of the Full Business Cases would be carried out by an external consultant rather than the Council’s Strategic Investment Unit (SIU). The SIU then review the full business case before it was submitted to the Council’s Towns Fund Assurance Panel. This process had been completed and the overall Benefit Cost Ratio of the Retail Diversification Project is 1.05, which was above the minimum level required under the Towns Fund criteria. The Assurance Panel approved the Business Case and SIU review on 21 February and it would now be submitted to government in March.

The Chair of the Economy Skills Transport and Environment Scrutiny Board also raised a question regarding the contingency plans that would be implemented if the Council failed to find someone suitable to run the shopping centre on its behalf.

In response, the Cabinet Member for Community Safety stated that the property management industry in the UK was very well served by experienced managing agents who acted for the owners of shopping centres and other commercial property assets throughout the UK, so there was no reason to think that SMBC would not be able to find a suitable firm to manage Kings Square. As a contingency officer had the in-house capability to manage the centre but consider that by appointing a firm with specific experience in shopping centre management it would reduce the risk of income deterioration. 

In response to the question raised by the Chair of the Economy Skills Transport Scrutiny Board regarding whether recent building condition and asbestos surveys had been undertaken, the Cabinet Member for Community Safety stated that these would be undertaken shortly after Cabinet approval, prior to the exchange of contracts.

Reason for Decision

The acquisition of Kings Square Shopping Centre would facilitate the delivery of the West Bromwich Masterplan.

The redevelopment of Kings square would play a vital role in transforming West Bromwich Town Centre and realising the ambitions set out in the West Bromwich Masterplan. Due to its prominence in the town centre, it would be critical to help change the current perception of place/place making

and, crucially, it would unlock economic growth by significantly reconfiguring the retail landscape of the town, reducing surplus retail space across the wider retail submarket and increasing demand for new retail space. Savills research suggested that Kings Square offered the most transformational opportunity in the town and that this redevelopment would be key in setting the town on a different growth trajectory, which would directly impact future land values and viability, improving the likelihood of organic growth and investment in future.

Alternative Options Considered

The Council could refrain from purchasing any property, relying instead on private developers bringing sites forward and submitting planning applications. However, there was no guarantee that owners would progress innovative schemes of the quality required, and in fact it was unlikely that any schemes would be brought forward for several years. Without intervention, the deliverability of the West Bromwich Masterplan would be extremely uncertain and public expectations would need to be managed accordingly.

         Agreed:-

(1)     that the acquisition of the leasehold interest in Kings Square Shopping Centre, West Bromwich for £4.75 million plus costs, with the inclusion of fees, stamp duty, surveys & due diligence costs will be £5,104,500 plus VAT, be approved;

(2)     that in connection with Resolution (1) above, the Director of Regeneration & Growth, in consultation with the Section 151 Officer and the Monitoring Officer, be authorised to approve contract documentation and execute it under seal, and to complete the purchase;

(3)     that the Director of Regeneration & Growth be authorised to approve the undertaking of a procurement process and the appointment of a specialist firm of management surveyors to manage the Kings Square centre, West Bromwich on the Council’s behalf;

(4)     that in connection with Resolution (1) above, the Director of Finance be authorised to include total acquisition costs to the Capital Programme for 2022/23.