West Bar Square £150m office development is a risk to Sheffield Council’s finances

A £150 million office development in the city centre is a risk to Sheffield Council’s finances but officers say they are prepared.

Friday, 22nd October 2021, 2:06 pm

The council has agreed to take the lease on one of the new office buildings at the West Bar Square development, 100,000 sq ft of Grade A office space being constructed at Riverside.

Auditors Ernst Young say the 40 year lease is a “risk on the council’s medium-term financial position” but council chiefs say they are aware of this and have not been reckless.

The Liberal Democrats previously said they were uneasy about the deal and Coun Mohammed Mahroof raised it again at a scrutiny meeting.

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The £150 million West Bar Square office development is a risk to Sheffield Council's finances, say auditors Ernst Young

“Previously when I’ve asked this question I’ve always been told that it’s very robust but clearly there is a concern.

“The council is signing a lease for 100,000 square feet of office space at a time when office space is not as popular as it used to be post-Covid

“If everything went pear shaped and nobody took a single square foot of office space, the council will still be responsible for paying. We have to pick up the cost of the rental if we don’t get a tenant.

“As an authority we’re £44m in deficit and we’re potentially exposing ourselves to millions of pounds of possible debt in the future.

“This is a significant risk. The city doesn’t need that many square foot of office space as we already have surplus offices.”

Executive director of resources, Eugene Walker, said the auditors hadn’t suddenly found a risk, the council was already aware of it.

“No one’s trying to hide the fact that this is a significant decision and there was a report to Cabinet with information around the risk. I welcome that scrutiny.

“A number of other authorities have taken risky decisions about property investments and have done things that are now coming back to bite them.

“We have absolutely not done that, we have taken a very limited focused approach to where we enter property deals. We focused on risk and then put programmes that mitigate that risk.”

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