CERT Property sees its multi-million pound plan to convert a Liverpool office building into an apartment complex refused for a second time – so will it appeal? Tony McDonough reports
Liverpool councillors have again rejected a multi-million pound plan to convert a Liverpool office building into an apartment complex.
Manchester-based CERT Property’s Moorfields scheme was first refused by councillors on the planning committee in early June. On Tuesday morning the project was put before the committee for a second time – and again it was refused.
Councillors voted five-three against the conversion of the 27,000 sq ft Centric House which is opposite Moorfields station and also front onto Dale Street. The decision came despite planning officers recommending approval.
Concerns centre around the viability of the scheme. An independent report submitted with the application said the scheme could not afford to offer any ‘affordable’ units (rent or sale prices no more than 80% of local market rates).
It also said it would not be able to offer the council an S106 contribution. This refers to money paid by developers towards improvement of local amenities or the local environment.
And the report added that even without these obligations the scheme still struggles for financial viability. This depends on an anticipated developer profit of 13% when construction costs are adjusted down by 5% and sales values are adjusted up by 5%.
This is lower than the nationally accepted minimum target of 15% – the lowest figure allowed in the viability guidance when piecemeal disposals are being considered, as is the case here.
CERT now has the option to appeal the decision to a Government planning inspector. If it were to win the appeal then it is likely Liverpool City Council would be liable for the costs.
However, the property firm told LBN it had no comment “at this time” and declined to say whether or not it would appeal.
It acquired the Centric House in 2018, paying £3.3m. The building had previously been occupied by banking giant Barclays but it had moved out more than a decade ago.
In an attempt to attract occupiers CERT spent more than £200,000 to upgrade the office accommodation. However, the space has never achieved an occupancy above 15% and CERT has had to pay annual running costs of £192,000.
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In the central business district occupiers are seeking either Grade A or high quality secondary space. “Architectural constraints” made it a challenge to bring Centric House up to that standard.
Some occupiers may also have been put off by the location. Moorfields has deteriorated in recent years with derelict properties and Moorfields Merseyrail station in need of a facelift.
So CERT decided to pivot to residential in order to extract some value from their investment. The residential scheme would include one and two-bedroom apartments and duplexes.