Two ambitious regeneration projects hatched during the pre-recession glory days hit the buffers this week.
However, the biggest surprise was not that the proposals were dropped, but that it took so long for them to be canned.
On Monday, Rotherham council tore up its development agreement with AIM-listed developer Oak Holdings for the £350m YES! leisure scheme. The following day, Wolverhampton council recommended the termination of its 2005 development agrement with Multi Developments for the £300m Summer Row shopping scheme.
Simon Bedford, a partner in Drivers Jonas Deloitte’s Manchester office, says the decisions are a clear response to the changed landscape for regeneration.
“Many regeneration schemes in the pipeline were put together on the premise of rising land values,” says Bedford, who is advising on renewed action plans for development in eight towns across Greater Manchester. “With this no longer a certainty, it has called into question their viability.”
Estates Gazette understands that Rotherham’s decision to terminate its agreement with Oak followed fraught meetings in December, at which the developer asked for more time to raise cash for the project.
The council’s strategic director of environment development services Karl Battersby says: “This is not a decision we have taken lightly and was based on our view of the likelihood of the project being delivered by Oak Holdings. This scheme has been running for more than 10 years and has not progressed as we would have wished.”
Tony Rawlinson, a director at Cairn Financial, Oak’s nominated adviser, claims that the developer was merely a “victim of being a small company putting together a big project in a difficult market”.
The decisions by Rotherham and Wolverhampton to put an end to ambitious projects in their boroughs are not unique, but should perhaps be even more commonplace.
Since the onset of the credit crunch, the London Development Agency has pulled the plug on the Silvertown Quays project in east London, Croydon council has terminated its development agreement with Minerva at Park Place, and Rochdale council has ended its partnership with Wilson Bowden for a £100m town centre regeneration.
Jackie Sadek, chief executive of UK Regeneration, says: “My feeling is that councils are often not moving quickly enough, and it is hard where schemes have become the political flagship of leading councillors. Like other organisations, councils are not always great at sharing best practice.”
With the benefit of hindsight, there was a clear timeline for projects, with those up and running before 2005, such as the Grand Arcade in Wigan and the Rock in Bury, now firmly established redevelopments of previously tired centres.
DJD’s Bedford says local authorities will now either have to wait for the market to improve or “unpick development agreements and masterplans with a view to more modest, bite-sized masterplans over the period to 2014”.
It also means the difficult job of again putting a borough’s money where its mouth is to make things happen. A good example of which is Stockport council’s decision last week to borrow £15m to buy the Grand Central complex from Targetfollow administrator Deloitte.
And Stockport is unlikely to be the only council looking to take greater control of the destiny of its key development sites in the coming year.
