Cabinet to consider proposals to buy the Tesco site in Morning Lane
Hackney Council’s Cabinet is set to consider proposals to buy land in Morning Lane currently occupied by Tesco, to provide workspace, offices, shops, a new Tesco superstore and homes.
In a report due to be considered by Cabinet on 23 January, Council officers recommend that the land could provide 270,000 sq ft of retail and commercial space – sufficient for over 1,500 new jobs - and 245,000 sq ft of new homes, including a minimum of at least 20% affordable homes onsite.
Tesco has been looking at options for its Morning Lane site that would allow them to keep a store but find a buyer to enable redevelopment to take place. The investment would allow Tesco to remain on the site, by occupying a brand new, smaller superstore.
The Council plans to work with Hackney Walk to develop the land, delivering a scheme to secure and invest in Hackney Central’s thriving town centre with a mixture of work and office space, shops, training and light manufacturing, and housing, with a core focus on the fashion industry.
The project would effectively be cost neutral to Hackney, as the cost would be made back from rental and ‘options’ payments covered by the future development. The investment would have no impact on the Council’s budget or council tax as it is able to borrow money to fund investment-led projects, which eventually make a profit, like this.
If Cabinet gives the proposal the green light, contracts will be finalised, with a view to completing the transaction in February 2017. Work on the planning application for the site is expected to take between 18 months and two years. It is intended that Tesco will remain in its existing store for the next three to four years, and will only close when the new store is ready to open.
This is a once in a generation opportunity for the Council to acquire a site like this, so it’s important that we carefully consider our options. It’s a key development site, and will be quickly snapped up by a housing developer if we decide not to go ahead, and we will lose control over what happens to this large plot of land in the middle of Hackney Central.
Since Tesco told us about their plans, we’ve been carefully balancing up our options. This is a significant investment, but the benefits to Hackney are just as significant; space for 1,500 jobs, genuinely affordable workspace, at least 50% of the retail jobs prioritised for Hackney residents and onsite affordable homes.
Steve Rigby, Chief Property Officer at Tesco, said: “Our business started in Hackney and we are proud of our connection to the local area, so we are delighted to be working with the Council on this project. We have looked at a number of proposals and held discussions with several parties but Hackney Council’s proposal align best with our aims of releasing value from our property portfolio, while enabling regeneration and enhancing the experience for customers.”
View the Cabinet report here.
Frequently Asked Questions:
- How much will it cost to buy the land?
This is commercially confidential until the contracts are signed. We anticipate we will be in a position to disclose the costs involved after contract completion.
- Who will provide the housing?
The construction of the residential units will be carried out by Hackney Walk Ltd, as part of the overall development.
- Why will the development only include 20% affordable housing?
The development will not only include 20% of affordable housing. This is the contractually agreed “floor” – or minimum - to be provided by Hackney Walk Ltd. If the planning process determines a greater proportion is due, then the greater proportion will apply. Once submitted, Hackney Walk's planning application will be scrutinised by the Local Planning Authority, as would any other, and is subject to the borough’s policy on affordable housing which states that proposals must include for 50% affordable housing, albeit this is subject to a financial viability test.
The contractual floor is an extra protection secured for the Council, in case the result of this financial viability test indicates that the proposals would only support less than 20% affordable housing.
- How long will it take for the Council to make its money back?
This is confidential until contracts have been signed.
- How many jobs will be created by the development? How many of these will go to local residents?
The development includes a minimum of 40-55% commercial space, sufficient for 1,500 retail and office jobs, of which approximately 400 are expected to be in retail. The remainder will be office based. Local residents will be given priority, via the Council’s Ways into Work service, to at least 50% of the retail jobs with our aspiration being for more.
- How does this fit in with the Draft Hackney Central Masterplan?
The scheme is compliant with both the existing and new draft masterplan, which has been a separate programme undertaken by planners in consultation with local residents and businesses. The site is included in the draft masterplan as an opportunity site, given its key location in the town centre.
- How can you pay for this land but not schools/a leisure centre?
It would not be possible to borrow money to build a school or leisure centre.
The proposal is an investment and the overall deal is structured so as to not to be a call on the Council’s resources since Tesco and Hackney Walk will make revenue and capital payments to cover the ongoing financing costs and debt repayment. The Council is able to borrow money for this scheme because it can clearly demonstrate that it will receive a return on its investment. In addition, this borrowing will not affect the Council’s overall borrowing cap.