Finance, Qualis Client and Economic Development (C-011-2021-22) - To consider an opportunity for EFDC to lease the 2nd floor of the Civic Offices (excluding the auditorium) for use as a Serviced Office.
Decision:
The Cabinet agreed to lease the 2nd floor Civic Offices, High Street Epping CM16 4BZ to Seed Space 1 Limited for a Serviced Office and trading as a franchise of Regus.
Minutes:
The Finance, Qualis Client and Economic Development Portfolio Holder, Councillor Philip introduced the report. He noted that the Pandemic had accelerated alternative working practices and with this they could now think of letting the 2nd floor. This was an opportunity for EFDC to lease the 2nd floor of the Civic Offices (excluding the auditorium) for use as a Serviced Office to Seed Space 1 Limited who was the IWG approved and exclusive multi-unit franchise partner for this region and who would be trading as Regus. This had a number of benefits to EFDC such as:
1. Income generation of an area of the Civic Offices that has never before been commercialised. This also includes payment of Business Rates and Service Charge for the same part of the building EFDC have always historically paid themselves and represents further savings.
2. A benefit to the local community by offering professional, contemporary and flexible workspace to both new start up and existing businesses.
3. Regus was an Internationally known brand which helps to cement the image of the Council.
4. Suitable commercial lease terms have been agreed, subject to EFDC consent and other commercial stipulations set out in the Heads of Terms.
Councillor Patel asked what outcomes we were first looking for, and what was the beak option. He was told that at first, we did not expect to rent out the second floor and it had a no-break clause.
Councillor Bedford asked if we would get additional funding from business rates and was there a service charge. He was told that yes there was a service charge (per square foot) covering all services except electricity.
Councillor Murray asked if the income was better than we anticipated and were we getting near the market rates. He was told that the definition of market rates was the maximum we could get for a space. This had been marketed extensively and this was the best offer. Councillor Murray commented that this was an excellent report and he was very supportive.
Councillor Patel asked what would be the impact on the day to day functioning of the Civic offices. He was told that the second floor would operate as a separate autonomous unit.
In response to Councillor Heap’s query Councillor Philip said that due diligence had been undertaken on the company by officers and outside agencies.
Councillor Brookes expressed concern about the amount of parking spaces allocated to the second floor. She was assured that EFDC had sufficient space allocated. And as we did not have staff on the second floor, we had a reduced need for car parking spaces.
Councillor C Whitbread said that this would bring back life to our high street and for small businesses this was a way forward.
Decision:
The Cabinet agreed to lease the 2nd floor Civic Offices, High Street Epping CM16 4BZ to Seed Space 1 Limited for a Serviced Office and trading as a franchise of Regus.
Reasons for Proposed Decision:
Recommend that the Cabinet approve a lease of the 2nd floor Civic Offices to Seed Space 1 Limited. This will generate additional rental income and at the same time provide a flexible and professional workspace to the local community and at no cost to EFDC.
The 2nd floor has been extensively marketed jointly by two commercial agents, one local and the other national since November 2020. During that time, Seed Space 1 Limited were the primary bidder for the 2nd floor as a whole unit. Prior to this offer we had already rejected 3 other offers from the same tenant and believe this offer was the best achievable in the current market and within the office sector.
Other Options for Action:
Alternative options are:
1. Refuse to progress negotiations with Seed Space 1 Limited and look for an alternate commercial tenant. If we do not receive another offer for the entire 2nd floor, additional capital costs will be necessary to separate the floor and install additional W/C facilities.
2. Retain the 2nd floor Civic Offices for EFDC use.
3. Explore other income generating options including residential use.
Supporting documents: