Cheshire East puts £48m Crewe regeneration on ice
Rising costs associated with the pandemic, as well as the cancellation of HS2, have contributed to making the Royal Arcades mixed-use project unviable.
Cheshire East Council will meet next week to determine the next steps for the £48m Crewe scheme, with the termination of a development agreement with Peveril Securities proposed.
Cancelling the contract, agreed in 2020, means it would be “unlikely any similar development [would be] delivered on this site in the next five years”, according to a report to the council’s economic scrutiny committee.
The report states that the leisure project, which features a bowling alley, cinema, and shops, is suffering from a significant viability gap and is not deliverable at present due to a variety of reasons.
These reasons, according to the council, include:
- Double-digit inflation
- A decline in town centre investment values by some 20-25%
- Dwindling confidence among operators due to the cost-of-living crisis
“Together, these are impacting heavily on the viability of commercially led leisure and retail developments, not just in Crewe, but across the UK,” the report states.
Another blow to Crewe’s regeneration hopes came when the government announced the scrapping of HS2 north of Birmingham in October.
The council is pursuing £11.2m from the government to make up for the impact cancelling the northern leg of the high-speed railway will have on the town.
Any funding secured through this avenue could support the delivery of the Royal Arcades project, but none has been secured as yet.
Cheshire East will continue to use the development site as a compound to support the ongoing delivery of phase one of the Royal Arcades project, which comprises a revamped bus station and a multistorey car park.
That part of the scheme is due to complete next year, at which point, Cheshire East Council hopes to find some meanwhile uses for the site that “generate activity and footfall in the town centre as soon as possible”, said Cllr Nick Mannion, vice chair of Cheshire East Council’s economy and growth committee.
“Three years ago, [the scheme] was fully viable, but across the UK, the viability of commercial-led leisure and retail developments is being met with challenge after challenge.
“These challenges, which remain, were not foreseen, and there were major rises in costs over a very short period.”
He added: “Despite these significant and ongoing challenges, our development partners Peveril Securities, and their development managers, Cordwell Property, have been proactively engaged with the council to identify ways of reducing this growing viability gap and explore other development options and ways of funding this.
“However, the council recognises that due to the economic picture nationally, phase two cannot currently be delivered.”