Liverpool to kickstart stalled Pall Mall with £15m grant and rent guarantee

Cash from the Strategic Futures fund will pave the way for a £55m office building, totalling 111,000 sq ft, bringing the 16-year wait for new-build space in the city’s central business district to an end.

Liverpool City Council’s cabinet will meet on 4 June to approve a plan to kickstart the first phase of the long-awaited project, which the authority has been trying for years to get off the ground.

The £15m grant proposed will allow Kier to make a start on site next summer with completion scheduled for 2028. The grant is subject to approval by both Liverpool City Council’s cabinet and MHCLG.

Leigh Thomas, group managing director of Kier Property, said: “Liverpool City Council has been a staunch advocate for the Pall Mall scheme and the report outlines our joint recognition that there is an acute need for highly sustainable new grade A office space that meets the needs of the modern workforce.

“The steps being proposed to address the viability challenge are both very positive and necessary. As development partner, we remain fully committed to regenerating the Pall Mall site and look forward to continuing to work with the council team as we seek to bring forward the first phase of this priority scheme.”

The council is also proposing using its “covenant strength as owner of the site to provide a rent guarantee for 15 years on any unlet space to help improve development value”.

This agreement would require Kier to secure pre-lets against a similar 15-year term for a minimum 40% of the building to help project viability, the city council said. If fully let before completion in June 2028, the guarantee will fall away.

Cllr Nick Small, Liverpool City Council’s cabinet member for growth and development, said: “This proposed investment would not just bring forward a top-quality Grade A office scheme and a new urban park in our business district, it will act as a catalyst to stimulate investor confidence in the city.

“We need to address the office supply and commercial rent catch-22 Liverpool has found itself in. Demand is now rising following the post-pandemic slump and we need to take advantage of that by unlocking supply.

“The Pall Mall scheme is oven-ready and could be open for business within three years, helping Liverpool to retain and attract major companies. Our Strategic Futures programme was designed exactly for the purpose of oiling the wheels of economic growth, which is exactly what this development would do.”

Plans for the project, put forward by Kier Property and CTP, were approved six years ago and proposed 400,000 sq ft of office space in total.

Liverpool City Council put the delays down to “viability issues and the post-pandemic drop in office demand, a challenge shared with most UK core cities”.

A start on site at Pall Mall would come as a welcome fillip to the city’s office agents who have long bemoaned a lack of Grade A new-build office space in the city. A lack of supply has stifled demand and seen rents lag behind other regional cities at below £30/sq ft.

There are several large occupier requirements floating around the Liverpool market that new-build space at Pall Mall could provide a landing spot for, including the Rathbones requirement, understood to be around 40,000 sq ft.