Leeds looks for Engine House sale in South Bank
The council’s executive board will next week be asked to sign off on the disposal of the site at Tower Works to a fund managed by Legal & General Investment Management.
A report by director of city development Martin Farrington’s team said that disposing of the site is the best way of continuing the area’s regeneration and securing the future of the listed building.
Around 200,000 sq ft of commercial space is under construction in the area, with 3,000 homes in the pipeline or delivered.
As outlined in the report, the property has been vacant for 20 years, and although Leeds City Council has ringfenced cash to part-fund its regeneration it has been unable to find a viable partner to develop the project itself.
The proposal to go before the executive board on 19 April is that the council disposes of the property at market value to the adjacent landowner: Mustard Wharf Property Unit Trust, a Jersey-based fund managed by LGIM – LGIM will then manage the development.
Further, it is suggested that the local authority uses its externally funded and ringfenced grant held for the Engine House as a contribution towards the conservation deficit of the property, subject to legal agreements being concluded.
This heritage funding would support shell and core works in the redevelopment scheme.
The report said that this will lever £2m of private sector investment into the property, leading to the Engine House being refurbished and brought into use in 2024.
Although at 7,500 sq ft, the Engine House is not among the area’s larger buildings, the 1899-constructed property is a landmark heritage asset. It comprises three sections, the Engine House, Boiler House and Economiser House.
The Engine House was owned by Homes England and has been empty for 20 years, passing into the city’s ownership for a nominal fee of £1 along with the Tower Works site’s famed Italianate towers.
LGIM is the institutional investor backing delivery of a build-to-rent scheme around the heritage buildings at Tower Works. Richardson and Ask Real Estate are the delivery partners for the 245-home scheme.
Two previous attempts to find a development partner have failed, with bidders put off by the lack of surrounding ownership and lack of public space.
A spokesperson for Leeds City Council said: “Since the council took ownership of the Engine House from the Homes & Communities Agency for a nominal £1 fee in 2013, we have been conscious of the need to protect the long-term future of this important heritage asset while also ensuring that any changes there deliver value for money for the local taxpayer.
“The proposed market-value sale of the property would generate significant income for the council. It would also, crucially, allow the new owners to press ahead with the renovation and refurbishment of the Engine House as part of their ongoing transformation of the surrounding Tower Works site – a key element of Leeds’s wider South Bank regeneration programme.
“It should be noted that, without a change in ownership, then the cost to the council of a full refurbishment of the building would be at least £2.6m.
“In addition to this, the council would be faced with the practical difficulties of carrying out major work on a property that sits at the heart of a site it does not own.
“It should also be noted that a £1.1m grant previously awarded to the council by the Homes & Communities Agency was ringfenced for spending on the Engine House. Making this grant available to the proposed new owners of the building would unlock a further £2m of private sector investment that, it is hoped, would see the Engine House brought back into use by the end of 2024.”