Archived decisions

HAMPSHIRE COUNTY COUNCIL

Decision Report :

1. Summary of Decision Area:

1.1. The purpose of this report is to consider the disposal options for this surplus freehold office building in the centre of Winchester. A strategy is proposed which aims to secure a sale at the earliest possible time and at optimum value.

1.2. The issues covered in the report include:

a) The background to the current position.

b) The current property market in Winchester.

c) Alternative disposal strategies.

d) Possible alternative uses for the building.

e) Parking provision associated with the building.

2. Contextual Information:

2.1. Prior to the refurbishment of Ashburton Court, a total of 625 staff occupied the east and west buildings. Following the successful refurbishment, a total of 1,100 staff will be moving back in. As a result of these major efficiency savings a number of buildings will become surplus to requirements. These are predominantly leasehold premises, specifically Sheridan House in Jewry Street, Capitol House in Bridge Street and Corinium House, Andover Road. The disposal of the buildings will relieve the County Council of significant annual rental and outgoings liabilities.

2.2. The leasehold interests in Capitol House and Corinium House will expire at the end of 2009 and will not be renewed. It is intended to market the leasehold interests in Sheridan House upon vacation later this year, although the leases are due to expire in any event by 2011.

2.3. The other remaining building that will immediately become surplus to requirements in this phase of the Winchester Reorganisation is Trafalgar House, and this property is considered in detail in this report.

3. The Property

3.1. Trafalgar House is a large office building which is owned freehold by the County Council. It forms part of the Castle Complex, being located on the eastern side of the square between Three Minsters House and the Winchester Law Courts.

3.2. The current property is based around an attractive Georgian former domestic building which has been very heavily extended over the years. It now provides 1,398 sq metres (15,048 sq ft) of office accommodation, which forms the headquarters of the Adult Services Department.

3.3. As part of a series of relocations associated with the Ashburton Court refurbishment project, the 140 Adult Services staff currently in Trafalgar House will shortly relocate away from the building. Most will move to the newly refurbished Ashburton Court, with the remainder moving to Hampshire House at Eastleigh. Trafalgar House will then be vacant and available for disposal.

4. Key Issues:

4.1. As a result of efficiencies achieved through the refurbishment of Ashburton Court, there is no requirement to reoccupy Trafalgar House and the building will become surplus to requirements.

4.2. The overall funding strategy for the Ashburton Court project includes the disposal of Trafalgar House, with the capital receipt from this being used to repay temporary borrowing incurred on the project.

4.3. Appropriate future uses for Trafalgar House have been considered, including advice taken from a local firm of surveyors. Despite the current downturn in the property market generally, it is considered that there is a reasonable prospect of securing a freehold sale of the building to an office occupier. It will however be necessary to be flexible in terms of a marketing strategy.

4.4. In principle, it is also possible that the building might lend itself to conversion to residential use. In the present residential market, this is unlikely to lead to greater interest than can be expected from potential office users. It is also a requirement of the current Local Plan that, before Winchester City Council will consider a change of use, any office building needs to be marketed for a minimum of twelve months in order to demonstrate whether or not demand from any potential office users exists.

4.5. Trafalgar House does not currently benefit from any dedicated car parking. This lack of parking provision is likely to be detrimental to achieving a successful disposal. A number of options related to making a small amount of car parking can be investigated to increase the prospects of achieving an early sale or letting, if this proves necessary.

5. Outline of Options:

5.1. Option 1: Do nothing. Leave the building vacant.

5.2. Option 2: Market the freehold interest in the building for continued office use.

5.3. Option 3: Market the premises on a leasehold basis for continued office use.

5.4. Option 4: Market the premises for an alternative use, having first sought planning permission for change of use.

6. Option Analysis / Comparison:

6.1. Option 1 - Do nothing. Leave the building vacant.

This option would involve leaving the building unused. The approach, would incur avoidable costs in terms of ongoing maintenance and security, would fail to secure the planned funding towards the Ashburton Court project and would not achieve best value from the asset. For these reasons, this option is not considered appropriate.

6.2. Option 2 - Market the freehold for offices.

Disposal of the freehold at an early date will both achieve a capital receipt and reduce ongoing revenue costs associated with the building. Advice from consultants indicates that, despite the downturn in market conditions generally, there is a reasonable prospect of securing a freehold disposal to an office owner/occupier. This would meet the requirements of the Ashburton Court funding strategy.

6.3. Option 3 - Market a leasehold interest.

This option seeks to secure a tenant for the building who would continue to use it as offices. Whilst less attractive than a permanent disposal of the building, this option would nonetheless still be consistent with the Ashburton Court funding strategy, subject to both the rent achieved and length of lease being sufficient. If a good quality office tenant could be found then this may also assist an eventual freehold disposal, as the building would then be of interest to investment purchasers.

6.4. Option 4 - Market for alternative use.

This option cannot be pursued at the present time, but may become available at a later date. If a sale of the building for continued office use proves unsuccessful, then a sale for alternative use, such as residential, can be explored. In principle, the building would lend itself to such use. However, any planning application to the local planning authority for change of use will need to demonstrate that there is no demand for the property as an office building. This will require the property to be marketed for at least twelve months. In parallel with the marketing for offices, it is proposed to consider residential conversion in more detail and continue to monitor the market for residential properties in central Winchester.

7. Conclusions:

7.1. Trafalgar House is readily marketable as an office building and advice from commercial consultants indicates that there is a reasonable prospect of securing a purchaser of the freehold interest. It is proposed that marketing of the building on this basis should proceed forthwith.

7.2. A letting for continued office use may also be attractive, depending upon the terms achievable. A letting to a party offering a quality covenant may also assist a future freehold disposal, as a fully let property could be an attractive investment opportunity. It is proposed therefore to also seek a good quality office tenant for the building.

7.3. If the freehold disposal for office use proves difficult, then consideration will also be given to possible disposal for alternative use in due course. Preparatory work in relation to this would need to be undertaken.

8. Recommendations:

8.1. The Panel advises the Executive Member for Policy and Resources that approval be given to the following:

a) That Trafalgar House, Winchester be declared surplus to requirements and sold on the open market on terms and conditions to be settled by the Director of Property Business and Regulatory Services (Strategic Manager - Assets and Development);

b) that the strategy for the marketing and disposal of the property should initially focus on a freehold disposal for continued office use, but that consideration also be given to the grant of a lease of the building to a good quality office occupier; and

c) that, in the event that the marketing of the building for continued office use is unsuccessful, the option of a sale for an alternative use be progressed.

CORPORATE OR LEGAL INFORMATION:

IMPACT ASSESSMENTS:

1. Equalities Impact Assessment

1.1 Equalities impact assessment has been considered in the development of this report and no adverse impact has been identified.

2. Impact on Crime and Disorder

2.2 The County Council has a legal obligation under Section 17 of the Crime and Disorder Act 1998 to consider the impact of all the decisions it makes on the prevention of crime. The strategy outlined in this report for disposal of this building will ensure that the property remains vacant for as short a time as possible reducing the potential for vandalism.

3. Climate change

3.1 The disposal of this building is part of the wider Hampshire Workstyle initiative which will reduce the number of buildings required by the County Council to deliver services. This reduction in floor space has a positive impact on the carbon footprint and energy consumption of the County Council. This complies with the County Council's wider considerations in respect of climate change and the need to be aware of the long term impacts.

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