Plymouth City Council has invested £58m in property in order to generate an income since 2010 to create a total investment portfolio in the region of £250m.
Plymouth leader Ian Bowyer at the Langage Industrial Estate
Source: Plymouth City Council
Council leader Ian Bowyer (Con) stressed the council had a long history of involvement in commercial property, including the development of a number of schemes in the 1970s and 1980s, and was not “starting from scratch”.
He told LGC the economic development of the city was equally important as generating an income stream when considering new investments. For example, the council purchased the Langage industrial estate just outside the city boundary which helped secure the site’s use for employment purposes. The council also developed 30,000 foot of the estate which helped to retain an employer which would otherwise have left the area.
The council has an in-house property team who use a matrix when deciding whether to purchase an asset. This considers factors such as the strength of tenants’ covenant, condition and quality of building and location. The team also models worst case scenarios, such as what happens if a tenant were to go bust, to ensure the council is not exposed to excessive risk. The council has a reserve, built up from rental income, to cover the cost of any unexpected voids.
The council has also “forward funded” a new retail site for Next.
“It’s not just about rental returns,” Cllr Bowyer said. ”Not only will this bring a derelict sit back into use, create 150 jobs and £200,000 rental income, it will also generate more business rates.”
Cllr Bowyer, who has been leader since 2016 after the previous Labour administration lost overall control, told LGC the strategy had cross party support with regular meetings between himself, the shadow cabinet member for finance and the council’s property team.
“We are agreed this is the right thing to do for Plymouth,” he said.
Plymouth: Investments are driven by drive to boost the local economy