Salford city council has provided a rental guarantee to kick-start a speculative office project by Ask Developments.
The council will guarantee 50% of the rental value of the 196,000 sq ft 101 Embankment office building, which will form the first phase of Greengate Embankment, a 1m sq ft development on the site of the former Manchester exchange railway station, bordering the city centre on the River Irwell.
The council, which has no plans to occupy the building, will take a 10-year head lease covering 50% of the rent. Sources suggest this could cost the council around £750,000 pa if the building lies empty. It will be financed from Salford’s main revenue budget.
Ask will use the deal as a platform from which to seek private sector funding for the project. Barbara Spicer, the council’s chief executive, said: “We know these are very difficult times, but we absolutely have to plan for recovery. If we can work with the private sector to bring forward development, we should. This is about creating 880 jobs.”
The costs had been built into the council’s medium-term financial plan, she added.
Ask and Network Rail’s £350m Greengate Embankment scheme is located within an area earmarked for wider regeneration, and is close to Manchester Victoria Station and the Co-operative Group’s 25-acre regeneration.
The council has already secured £8m of funding from the Homes and Communities Agency and Northwest Regional Development Agency for public realm works, which complete next April.
Ask has secured a prelet deal with car-park operator Q-Park for a 442-space car park in the basement of the first phase.
Accountant KPMG is understood to have shortlisted Greengate Embankment for its 70,000 sq ft requirement, although it is considering other schemes in Manchester, including Argent’s and the Greater Manchester Property Venture Fund’s One St Peter’s Square.
Alan Burke, director at Ask Developments, said; “We are in discussions with potential investment partners to commence the first phase of office development at Greengate Embankment in early 2012.
“The continued strength of the occupier market in the city centre and the lack of new Grade A space available from 2013 gives us confidence that now is the right time to be planning speculative development.
“We are working closely with Salford City Council and Network Rail to deliver our joint ambitions for Greengate Embankment.”
daniel.cunningham@estatesgazette.com
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