Chester Northgate Aerial

Open letter calls for council to down tools on £300m Northgate

Charlie Schouten

An open letter to Cheshire West & Chester Council, backed by a series of high-profile property businesses and developers, has called on the council to down tools on the £300m Northgate scheme to undertake a full review of the project’s viability and funding.

The letter, put forward by Tim Kenney of property consultant Kenneymoore and Guy Butler of developer Glenbrook, has been sent out to business leaders across the region, and argues the private sector has “lost confidence in the council to deliver a successful regeneration within a reasonable timescale”.

Alongside Kenneymoore and Glenbrook, a number of big names have already agreed to lend their support the letter including Columbia Threadneedle, Mason Owen, Big Heritage, Beresford Adams Commercial, and the Grosvenor Hotel, ahead of its submission to the council on 18 May.

The £300m mixed-use scheme has picked up pace since the award of a new planning consent in September 2016. Early last year, House of Fraser signed as retail anchor and Crowne Plaza agreed terms on a new conferencing hotel.

Northgate would include 45 further shops, 12 restaurants, a Picturehouse cinema, 120 apartments, 1,000 parking spaces and 25,000 sq ft of offices. Retail and leisure tenants, including Tapas Revolution in a 3,000 sq ft unit, have been announced, with others in the pipeline.

However, the letter describes Northgate as “misguided and unviable,” and has been addressed to council chief executive Gerald Meehan, leader Samantha Dixon, and Chester MP Chris Matheson. It also heavily criticises the “slow progress” made on the scheme so far.

“We agree sustainable and deliverable development on this important site is critical to the future vitality of Chester, however progress over the recent years has been slow and the proposed scheme is now both misguided and unviable,” it said.

“With all the development spend coming from public funds or borrowing, the current trajectory is concerning, and we believe pausing now is the sensible course of action.”

The letter also argued there was more than 250,000 sq ft of vacant retail space in the city already, and that a move to shift the focus of Northgate on to leisure operators “is now too late”, with a number of high-profile operators, including Byron, Las Iguanas and Chimichanga all announcing closures this year.

It is also highly critical of the council’s financial approach to the scheme, arguing more than £30m had been spent with “little or no return”, and said the proposals to demolish the existing hotel on the site and replace it with a new-build Crowne Plaza was “fundamentally wrong”.

“The council admits the current project is not financially viable; nor has it secured significant or deliverable rent paying pre-lets, or any private sector funding,” it said.

The letter concluded: “In asking the council to cease work on the Northgate project we also seek a comprehensive review for alternative use for the site, and that the procurement of any new scheme be undertaken with the full engagement of the private sector.

“We ask that an independent review of the financial expenditure to date is undertaken and shared publicly.

“In signing this letter, we also offer our support to be part of a wider consultation to create a sustainable Northgate development of which the City can be proud.”

Kenney has been an outspoken critic of the council’s approach to retail development, particularly its £71m Barons Quay project in Northwich, which he said was “clear failure” and “would end up being demolished”. The development, opened in 2016, only has three tenants and remains largely vacant.

Speaking at Place North West’s Cheshire Development Update, Kenney said aiming to compete with Manchester or Liverpool was the wrong approach, and that Chester should instead use its heritage assets and a leisure-led approach to regeneration.

“People don’t come to Chester to shop, nor should they,” he said. “We can’t keep chasing after retail demand that isn’t there anymore.”

Despite the heavy criticism, the council remains bullish that private backers will support the scheme, and has set out a timeline to deliver phase one of the scheme by 2020 and the second phase by 2022.

Speaking to Place North West at March’s MIPIM property conference in Cannes, the council’s director of place commissioning Graham Pink said the site “had largely been de-risked”.

“The encouraging thing is that funders seem to ‘get it’ – they appreciate the importance of the city’s history, the affluence of the county and sub-region. Now is the time to have those conversations,” he said.

The council has also even gone as far as to shortlist two contractors, understood to be Laing O’Rourke and Vinci, to deliver the scheme. A public enquiry into the use of CPO powers for the scheme was completed in February and a favourable verdict is expected in the summer.

The council, advised by GVA and Rivington Land, already owns around 85% of the land required. Gardiner & Theobald is the project manager for the scheme while Aecom is the quantity surveyor.

Cheshire West & Chester has been approached for comment. The full text of the letter is below.


Proposed Chester Northgate Development

We, the undersigned, believe that Cheshire West & Chester Council are about to make a huge mistake with the 14 acre £300m Chester Northgate Development, and we have lost confidence in the ability of the Council to deliver a successful regeneration within a reasonable timescale.

We ask the Council, their consultants and advisors to cease all further work on the main retail and hotel relocation elements of the scheme with immediate effect, and to comprehensively review the use, viability, programme and funding of the development. What is currently proposed for the hotel relocation, and the main retail element is now fundamentally the wrong scheme.

We agree sustainable and deliverable development on this important site is critical to the future vitality of Chester, however progress over the recent years has been slow and with all the development spend coming from public funds or borrowing, the current trajectory is concerning. We believe stopping now is the only sensible course of action.

Current published statistics from The British Retail Consortium, the failed merger of Hammerson with Intu, high profile retailer insolvencies, and general comments from the UK’s major retailers (including the proposed anchor store House of Fraser) demonstrate that high street retailing is experiencing structural and permanent change. Despite all of this, the Council continue to propose a new and very large retail led scheme.

Retailers ‘secured’ are likely to be sourced from elsewhere in the City, thus creating even more voids in the established retail core -a common problem with new retail schemes. Even before the start of the scheme its impact is being felt as retailers are not committing to leases of length, and we have over 250,000 sq ft of vacant space in the City before Northgate adds more. We have stagnation and a lack of investment as a direct consequence of the spectre of the development, and the market needs certainty, not uncertainty.

The Council openly admits the current project is not financially viable. It has not secured significant or deliverable rent paying pre-lets, nor any private sector funding. To date the scheme has cost £30m+ which shows little or no return. Mistakes have been made by the Council at Baron’s Quay, Northwich, where the £70m+ new development has only three occupiers, and is a clear failure. This is an unsound track record on which to try and deliver Chester Northgate.

In asking the Council to cease work on the Northgate Project we seek a comprehensive review of alternative uses for the site, and that the procurement of any new scheme be undertaken with the full engagement of the private sector. We also ask that an independent review of the financial expenditure to date is undertaken and shared publicly.

In supporting this letter, we also offer our support to be part of a wider consultation to create a sustainable alternative Northgate Development of which the City can be proud.

To offer comments on the letter, please contact:

Tim Kenney: tim@kenneymoore.co.uk

Guy Butler: guy.butler@glenbrookproperty.co.uk

To date, signatories include:

Acaster LLP

Barlows

Benison Day Nursery

Beresford Adams Commercial

Big Heritage

Bolton Birch

Brooker & Co

Cervidae

Grosvenor Hotel

Dandy Group

Ewan McKay Property Consultants

Glenbrook

Kenneymoore

Hollins Murray

Lowe & Co

Mason Owen

Morgan Maire

New Street Commercial

Oddfellows Hotel

Signet Group

District Estates

Columbia Threadneedle

Delamere Forest Properties

Your Comments

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I recall similar scaremongering to the Liverpool One development was voiced prior to its delivery which have unfounded. Carry on CW&C with this exciting and progressive development.

By Ian Rogers

They’ve spent £30 million with little or no return? Only a council could be so reckless, sounds a wise move to get them to pause and move them out of the frame if that’s the case.

By Spadger

This needs a proper developer like Muse, Splash, Capital & Centric or Ask, someone that gets regeneration, heritage and mixed use

By Jon Andrews

The Council should give the land to a experienced mixed use developer, with a rental return/capital return once the private sector has made work.
Shrink the retail element down.
More residential units and involve the University and Law College to bring students into the town from out of town campuses, who can then spend money in the cafes and retail units.

By Sam T

Ian I wouldn’t exactly call Liverpool One a success commercially, it’s never got the rents that were hoped for and it seems likely that there be even more empty units if a few years time, retail is dead and restaurant chains are also feeling the crunch.

By Holy days

Liverpool One has been a tremendous success in many ways, the amount of footfall it brings into the city, the beacon of light it was for regeneration in the wider area, the confidence it eschewed in the physic of Liverpool, plus the new and various retail outlets
Not to mention the complete modernisation of an area around Paradise Street that had seemed to have lost its reason for being.
No, I would not agree with that statement because no matter what the rates are,the owners seem happy.

By Liverpolitis

Only very recently has Manchester’s prime retail rents gone above Liverpool’s (by £5 a sq ft). Liverpool is on £265 a sq ft, Manchester is now on £270. The national average is just over £100. Any suggestion that Liverpool One hasn’t been a complete success is just rot.

By Mike

Council’s are at their best when they intervene in Markets to correct market failure / support future prosperity. This scheme is needed and any viability issues purely relate to mistakes of the past and allowing Cheshire Oaks in the first place.

By PB

PB – just like Barons Quay!! Another fine example of intervention.

By Right said Fred

Chester is going from a city to a town. Council needs to manage this decline as best it can, but it’s decline is inevitable and started 20 years ago. Public transport connectivity is appalling, money should go into making better connections to Manchester and Birmingham and the North Wales coast.

By Robert

Tim and Guy’s letter smacks of Brexit ‘Project Fear’ – Northgate will give us something to be proud of rather than embarrassed by. Have they walked around the back of the Forum or been to the market recently? The whole of the site down to the Crowne Plaza is really poor, like a cruddy bit of Birmingham, shown up even more now by the excellent Storyhouse which shows what you can do when you to kick-start regeneration.

By Steve

This is bad for Liverpool city region.

By Sting

Barons quay is a complete disaster.
Chester Northgate. will be a complete disaster

What the people of Northwich want from Cheshire west and Chester council is
Resignations or sackings

By Northwich

Interesting analogy Steve. Like Brexit, Northgate hasn’t actually happened yet and we don’t yet know what the long term impact will be. Unlike Brexit, which is all about putting up barriers and is both a national embarrassment and a gratuitous act of self mutilation, Northgate should eventually be something to be proud of and really benefit the city by appealing to a broader range of people and business, removing barriers, encouraging them back into the centre and consolidating what is a prosperous and historic city.

By Brexgate

I fear me and Brexgate are on different sides of the, er, gate? Personally, I would prefer it if public money was spent on excellent UK regeneration projects like Northgate, not (part) bailing out Greece to the tune of 32 billion euros or paying for EU buildings in Strasbourg and Brussels @ 500 million euros a pop!

By Steve

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