13 Sep 2024
Delays to the completion of Jubilee Square have contributed to a half-a-million pounds shortfall in council finances.
This week’s meeting of the public realm committee included a report on SADC’s financial position and consequential impact on plans for the financial year 2024/2025.
It stated: “In setting the budget for 2024/25 the council agreed £2.4m of savings and income increases be made in the financial year 2024/25. At that time, it was identified in the MTFS [Medium-Term Financial Strategy] there would be a need to close a gap of £0.5m (after 2023/24 savings) for 2025/26 to achieve a balanced budget for that financial year.
“The forecast outturn for the General Fund at the end of the first quarter of the year (June 2024) is £502k worse than the budget, principally due to a shortfall in commercial property rental income. There is an opportunity to address that position over the remainder of the financial year.”
Speaking at the committee meeting, SADC assistant director for finance Linda Parker confirmed that one of the biggest reasons for the variance was the income from the commercial space at Jubilee Square.
“There’s the opportunity if we can attract new tenants to take on that commercial space that will chip away at that half a million variance.
“My colleague Tom Hardy from the estates section is working very hard with the two agents that we’ve got to encourage tenants into the Jubilee commercial space area. We’re hoping that there will be some good news with regards to that.”
Cllr Terrie Smith questioned whether the shortfall would be completely realised, to which Linda said she couldn’t say how many tenants and how much of the space would be rented by the end of the financial year: “We’re actively working hard to get those tenants in.”
The project is also costing more when it comes to internal works.
In July councillors voted for an additional spend of £875,000 to fit out the office space at Jubilee Square, £606,000 to be funded from additional borrowing.
The initial plans were that any fit out would only take place in discussion with prospective tenants, but it now appears SADC has been advised that it cannot let the spaces in their current condition and will need to spend considerably more on internal improvements.
A report to Full Council said: “Following advice from the council’s appointed specialist commercial property advisors, the plan is to fit out parts of the commercial space, which will act as show spaces to support the marketing strategy.
“The areas selected to be fitted out are based on feedback from prospective tenants. The works will also include fitting out the stair cores, foyer, and terrace of Francis Bacon House.”
Tom Hardy, SADC assistant director (built environment) explained: “Jubilee Square’s commercial space was built to shell and core standard within the project’s budget. This involves the completion of the interior with minimum finishing.
“It was always recognised that additional funds would need to be allocated for a fit-out for prospective tenants and Full Council approved funds for a part-fit out at its July meeting.
“This will be what is known in the industry as a Category A fit out to equip the space with its main interior features such as raised floors and ventilation. The work will go ahead shortly and is scheduled for completion later this year.
“Our prospective tenants will still have input into the majority of the fit out so it can meet their requirements and we will continue discussions about tenancy agreements. Carrying out a part fit out now to create some show space is recommended as part of the marketing.
“Once tenants are secured, they will carry out a Category B fit out which will include their bespoke needs such as work stations, meeting rooms, furnishings and branding.
“This process is standard for the long-term leasing of building space by commercial landlords to businesses. It has no impact on move-in dates for prospective tenants and therefore no impact on revenue projections.”
