Agenda item

Report of the Director of Property Services and Development.

The Cabinet Member for Jobs, Regeneration and Climate Change considered a report of the Director of Property Services and Development that sought  approval to the surrender of the current leases on Mercia Business Centre and to the simultaneous regrant of a new long lease. This would facilitate the demolition of the existing buildings to be replaced with purpose-built student accommodation and ancillary commercial accommodation.  The student accommodation scheme was approved at Planning Committee on 31 July 2025 and is subject to completion of a Section 106 agreement.

The report indicated that Westwood Business Park is evolving into a student accommodation hub on the north side of Westwood Way, where Mercia Business Centre is located, bringing economic opportunities for the City and delivering financial returns to help support the delivery of services to Coventry residents.

Purpose-built student accommodation supports the University of Warwick as a leading place of learning and research in the UK, providing businesses an opportunity to recruit their future skilled workforce and help strengthen the economy of the city.

The proposed scheme for Mercia Business Centre involves the Council and the developer entering into an Agreement for Lease which will be conditional on the developer:-

1)  Securing an acceptable planning permission for the proposed

development

2)  Entering into a building contract and

3)  Acquiring the interests of the existing occupational leasehold interests.

The subject property is a collection of two-storey office buildings comprising 23 units with associated parking built in the late 1980/early 1990’s, located on Torwood Close on the northern side of Westwood Way. It has been occupied by a variety of businesses and has been let on mainly short term occupational tenancies, three of which are partially occupied and nine vacant units (approx. 40% of the property).

The site, which extends to approximately 2.89 acres (1.17 Ha) is subject to seven headleases granted for a term of 125 years from 22 November 1988 expiring on the 21 November 2113. A capital premium payment was received by the Council when granting the original leases hence the current rent passing is a peppercorn. The leases currently restrict the use of each demise to offices. The developer, Skybridge Property Mercia Limited (SPML) is acquiring the headleases from the long leaseholders.

SPML are proposing to construct a purpose-built student housing development of up to 1,006 beds with ground floor commercial. They have agreed to acquire the headleases from Mercia Business Village (Coventry Ltd), which have an unexpired term of 88 years. SPML are seeking a new 153-year lease (which allows the proposed development on the land outlined in red in Appendix 1). The new lease is to include of a piece of amenity land currently accommodating trees and shrubs on the corner of Westwood Way and Torwood Close (shown hatched red on the plan). The amenity land is owned by the Council and is also part of the adopted highway.

SPML intend to forward sell the completed development to an investor or investment fund. As such the Council may be asked to grant the lease in the name of the fund or investor. If the funder requires the demise to be split across two separate leases rather than a single lease, officers will review the arrangement to ensure it continues to meet the Council’s requirements, and its position remains fully protected.

The Council has been professionally advised by independent property consultants Avison Young in the commercial negotiations around the terms of the new lease to ensure ‘best consideration’ is obtained.

The Business Park has already seen other sites on the estate redeveloped for high quality student housing and the advice provided by Avison Young is that due to the changing nature of the way offices are occupied, the demand for older second-hand office space, such as that at Westwood Business Park, is low and does not show signs of improvement. Therefore, finding suitable alternative uses for the land which can support the continued growth and improved experience of students attending the University of Warwick, is important for effective land use and economic growth for the city.

RESOLVED that the Cabinet Member for Jobs, Regeneration and Climate Change, subject to the consideration of the additional confidential information contained in the corresponding private report,:

1.  Approves the surrender of the existing leases across the former Mercia Business Centre site at Westwood Business Park.

2.  Approves the simultaneous grant of new 153-year lease(s) to Skybridge Property Limited or their nominated investment fund or investor, to facilitate the development of up to 1,006 bed Purpose-built student accommodation scheme with a new ground rent.

3.  Delegates authority to the Director of Property Services and Development, following consultation with the Director of Finance and Resources, the Director of Law and Governance and the Cabinet Member for Jobs, Regeneration and Climate Change, to negotiate and finalise the terms of the grant of the new lease(s), to undertake the necessary due diligence, complete all necessary legal documentation to facilitate the completion of the transaction and to take all necessary, incidental or ancillary steps for the carrying into effect any of the recommendations set out in this report.