The original Lime Street Gateway plans

Soaring building costs halt Lime Street tower plans

Iliad Group has abandoned plans to build a residential tower at its Lime Street Gateway joint venture with English Partnerships in Liverpool due to spiralling construction costs.

The announcement was made shortly after a decision by the Court of Appeal rejected shopkeeper's objections to a Compulsory Purchase Order at the site.

Bill Addy, development director of Iliad, said: "Firstly we are very pleased at the positive move forward represented by the Court of Appeal's judgement.

"The difficulties caused by the CPO challenge added two years to the project and with the building market the way it is costs have risen sharply in the meantime. In the end the delay has tipped the balance and the tower is no longer viable.

"EP have been working with us closely and together we will continue to deliver a great scheme at the entrance to the city."

Concourse House, the existing dilapidated tower on the site, will be demolished and, Addy said, a new building designed in its place.

Addy declined to discuss figures for the tower but confirmed contractor Laing O'Rourke was discharged from the project in April after the two firms failed to agree a price.

Iliad and regeneration partners Liverpool Vision and English Partnerships are expected to submit a revised planning application for the scheme by the end of the year.

The 27-storey tower was to have contained 150 apartments on 22 of its floors with retail and offices on the remaining five.

Addy said the design by Glenn Howells architects was of an unusually high standard for the city and incurred costs to match. Construction on the sloping site was also hampered by the engineering constraints of building next to a busy train station.

Jim Gill, chief executive of Liverpool Vision, stressed that the principal aim of Lime Street Gateway – to remove the eyesore 1960s buildings, open up the Victorian splendour of the station and provide a broad area of attractive public realm – had not changed.

"We intend to start work on the Gateway scheme in the second quarter of next year. We are working closely with our development partner Iliad to review other commercial options for the tower site," he said.

Eliot Lewis-Ward, English Partnerships' area director for Merseyside, said: "We are delighted that the way is now clear for us to gain vacant possession of the whole site. We can now move forward to achieve that aim."

The few remaining tenants at the Lime Street shops are expected to vacate their premises by the end of January.

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