Council pledges to buy £20m block in bid to save development go ahead

A CITY council has pledged to buy a £20m, 10-storey office block from its developers if no other buyer can be found, in order to enable the long-awaited project to go ahead.

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It is hoped that Number 3 St Paul’s Place will attract businesses looking for grade A office space in the very centre of Sheffield, as well as sending out the message that the city “is open for business”.

The scheme is seen as the final piece in Sheffield’s Heart of the City project, which in recent years has seen the development of sites including 1 St Paul’s Place – home to law firm DLA Piper and Royal Bank of Scotland – 2 St Paul’s Place, which is occupied by the Department for Schools, Children and Families, the City Lofts apartment block, the four-star Mercure Hotel and several upmarket bars and restaurants.

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The development of 3 St Paul’s Place has now been made possible by Sheffield Council agreeing to buy the building from developer CTP Limited a year after it is built, in the “unlikely” event that CTP cannot find another buyer.

The latest building will complete CTP’s programme, which began in 2005. No 2 St Paul’s Place was completed in 2009.

A Sheffield Council spokesman said: “The price which the council would pay has been negotiated by external surveyors on behalf of the council and would just cover the cost of the development, plus a small profit.

“However it is expected that the developers will sell to a private buyer at a higher price.

“If the council does buy the property, the cost of funding the purchase would be covered by the increased income from Business Rates and rent.”

The spokesman added: “The intention is that CTP will sell the completed building to a private sector buyer but, in the current market, securing funding for a speculative development is almost impossible.

“If the council is able to guarantee a minimum sale price, this will enable the development to go ahead, provided that CTP obtain an European Regional Development Fund (ERDF) grant they have applied for.”

According to council bosses, there is a growing demand for Grade A offices in the city centre, but “no high-quality offices are readily available”, a situation common to most UK cities outside of London.

Councillor Bryan Lodge, the council’s cabinet member for finance and resources, said: “In the last five years development of new office development has virtually stopped.

“By enabling this development to proceed now, it will help complete the development of St Paul’s Place at the Heart of the City – one of the key projects in the city centre masterplan – and help to support business growth in Sheffield.

“These are challenging economic conditions and the council is taking the initiative to make things happen.

“We firmly believe this new development will assist several existing businesses that want to move into good quality new offices, and could also attract new businesses into the city.”

It is hoped that more than 700 new jobs will be accommodated within 3 St Paul’s Place, which could house businesses that have moved from elsewhere in Sheffield or come in to the city for the first time.

Subject to approval of the ERDF grant, a start on enabling works for construction will commence as early as December this year, and the development will be completed in 2015.

CTP director David Topham said: “We know that there is a great deal of demand from professional businesses wanting prestigious office space in the best location in the city centre.

“At the present time this demand is simply not being met with the right product. The new offices that we intend to build at 3 St Paul’s Place will provide that.

“We are confident that the development will be very successful both in terms of lettings and the subsequent sale in the private investment market.”