west*wales*news*review

West Wales News Review — analysis with a sustainability slant

Officegate at East Gate: liabilities loom in Llanelli

Ah, the prestigious East Gate development in Llanelli, the £26-million regeneration ‘quarter’ with cinema, restaurants, shops, hotel – and loads of office space. How come there isn’t a queue of eager applicants for the 21,000 square feet – 1,989 square metres — of office accommodation?

Carmarthenshire County Council is masterminding the £60 million redevelopment of Llanelli, of which East Gate is a key part. Council chief executive Mark James was soothingly emollient at the council meeting on November 7th. He did not actually answer a question from Councillor Sian Caiach about the rental income likely to come from an interested business, should it sign a deal for the offices, but referred instead to “lots of exciting private-sector interest in Llanelli”. Councillors cannot ask follow-up questions, I was told by my learned neighbour in the public gallery. This means that a councillor who is fobbed-off with an uninformative answer just has to accept it.

East Gate has been developed by Henry Davidson Developments Ltd, a subsidiary of Development Securities plc, with the aid of £15 million in funding from Banco Santander. National names Odeon cinema and Travelodge hotel have signed up, and so have Carmarthenshire County Council. Development Securities’ website says that the office space was pre-let to the council. The website of builders Britannia Construction says that the office space has been built for the council. We know that the council is committed to paying Henry Davidson Developments about £250,000 a year for this space — for 20 years.

Now, Carmarthenshire will soon be awash with unwanted council-owned buildings, if the comprehensive schools in Llandovery and Llandeilo are closed, as planned. Director of Education Robert Sully bemoaned the flat property market when speaking at the September meeting of the education and children scrutiny committee. According to the minutes, he said that a vacant school site had recently sold at a very low value.

The main workplace for council staff in Llanelli is the five-storey Ty Elwyn, which is exactly 30 years old. It needs refurbishment costing over £1 million, the council says – but then what? Will the council tax department and the others based in Ty Elwyn move across to East Gate, or will outlying offices close so that East Gate is fully occupied? The office space is sufficient for about 200 people, and the rent to Henry Davidson will be some £1,250 a year for each of them.

The ultimate beneficiaries will be the main shareholders in Henry Davidson’s parent, Development Securities, and they are the huge US asset management firm BlackRock Inc, owner of 17.3% of the equity as of November 7th; Prudential plc, with 8.92%; and F&C Asset Management plc with 6.04%. Three more asset management companies each own over 5%.

It doesn’t sound a top notch deal for the people of Carmarthenshire, left to pick up the bill for offices that may be comfortable but which are not actually needed. Indeed, if council staff are moved out of local offices just so that East Gate will be occupied, more travel is very likely to result, with more fuel use, more emissions, and a continuation of the worrying centralisation of services, far away from our villages and small towns.

The official view seems to be that shipping council staff into Llanelli will be wonderful for the town, because they will be “footfall”, spending money in the shops, restaurants and of course the cinema. Yet if they are spending in Llanelli, they are not spending in the neighbourhoods around their old workplaces, which would be at high risk of descending down the spiral of decline.

Carmarthenshire seems keen to offload the East Gate offices, which are being marketed by estate agents Knight Frank for an annual rent of £12.50 a square foot, £132 a square metre. If  they remain unlet, and council staff have to occupy them, alterations will be needed to the open-plan space, costing more money.  If — if — the council can find one or more tenants, would the rental income match the amounts that Carmarthenshire is contracted to pay to Henry Davidson? That’s doubtful, because £132 a square metre is a lot in West Wales!

The grand Llanelli schemes, for a theatre and the refurbishment of Llanelly House and the library, as well as East Gate, have drawn in funding from the Welsh Assembly Government (about 20% of the £60-plus million), the European Rural Development Fund (18%), as well as smaller amounts from other sources. Carmarthenshire’s own share of the costs appears similar to the Welsh Assembly Government’s. Henry Davidson has an even bigger role as the provider of East Gate.

The news that one of the East Gate restaurants is to be a branch of Greene King’s budget chain Hungry Horse is a pointer to the future ambiance of this costly development. There’s the chicken chain Nando’s too, and a Scarlets restaurant (indirectly backed by the county council). Overall it’s not very upmarket, geared more to the cash-strapped than to high rollers.

Given the neglected air of much of Llanelli’s faded town centre, wouldn’t it have made more sense to concentrate the investment there, rather than in a new build of dubious utility? There’ll be a long time to ponder, as we pay for it.

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4 thoughts on “Officegate at East Gate: liabilities loom in Llanelli

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