Wirral pays Peel £5m for Hythe

Described as a £7.7m office scheme when it was under construction, the three-storey building off Tower Road is now owned by the local authority after the developer triggered a contractual put/call option.

The £5m purchase of the Hythe occurred during the first quarter of this financial year, according to a report to the Wirral Council’s policy and resources committee.

Peel L&P, now known as Peel Waters, and Wirral Council had entered into an agreement in September 2020 to help derisk the delivery of the 33,500 sq ft office block – viewed as a key part of the Wirral Waters regeneration plan. Peel had told the council it was worried the project would be unviable without this risk assurance – even with a £3m grant from Liverpool City Region Combined Authority.

Under the terms of the deal, the council was obligated to spend £5m to purchase a 250-year lease on the property should the value of the scheme be below £5m three years after it was constructed. Conversely, if the value of Hythe ever exceeded £5m during that time frame, the council could force Peel to sell it the office block for that same price.

Wirral Council had flagged that the lease option may be triggered by Peel in a report to its economy and regeneration committee last year. At the time, it noted that the past two evaluations of the building – which completed in 2021 – had come in at £3.9m in 2022 and £3.45m in 2023. The report noted that the value of the property, which has two of its three floors fully let, had diminished more than expected because of rising interest rates, economic pressures, and the war in Ukraine.

According to that 2024 council report, the £5m purchase was to be funded through borrowing at 5% over 50 years of £250,000 a year.

Regarding the deal, a Wirral Council spokesperson said: “Wirral Waters is one of the largest and most significant regeneration schemes not just in this region but nationally and its success is a vital element of the wider efforts to deliver new homes and promote growth and prosperity for our borough, and the development of the Hythe offices is integral to that.

“The council will do all it can to support progress across the Wirral Waters site and this agreement with Peel is another illustration of the commitment to attracting new inward investment and jobs to Wirral.”

Richard Mawdsley, director of development for Wirral Waters, pointed out the positives of the building – noting that is more than 70% let.

“Following the option agreement, Wirral Council have gained control of the BREEAM Excellent Grade A office building that cost over £7m to build and is income producing,” he said. “Rental and property values will undoubtedly grow over time as markets improve and the regeneration of the area continues. This will be accelerated if surrounding connectivity infrastructure comes forward in a timely fashion.”