New twist in Albion Square saga as council seeks new development partner

The asbestos is gone but another £17m is needed

Like buses, you wait for a big Hull regeneration story to come along and then two arrive at once.

First, the delay to the relocation of the Arctic Corsair which you can read about here: https://aqyoung61.substack.com/p/if-and-when-the-boat-comes-in Now it’s an update on the long-running saga that is the Albion Square development.

Actually, there’s a third story brewing which I’ll get round to later this week but for now let’s pick the bones out of a new report on Albion Square heading to a meeting of the city council’s cabinet next week. Because it’s such a key development in the city centre, it’s worth making this an exception to my current schedule of weekend long-reads so grab a coffee, sit back and make of it what you will.

Quick recap: BHS goes into administration in April 2016 and the Hull store closes four months later. This leaves two empty former department stores next to each other, the former Co-op having closed in the late 1980s. On the upper floor of the latter is an empty nightclub where the likes of Jimi Hendrix and Pink Floyd played in its 1960s heyday. Above the nightclub is a vast ‘hankerchief’ concrete dome roof with no supporting pillars. The only similar-sized structure in the world is said to be part of the Kremlin in Moscow. Above the front of the old BHS is Alan Boyson’s Three Ships mural, said to be the largest public artwork of its kind in the UK. It’s now a Grade II listed structure after a campaign to save it from potential demolition. The city council acquired the site in 2017 and with contractors having recently removed the last asbestos from the derelict building, you’re just about up to speed.

The cabinet report sets out the next steps, laying out various options and making some recommendations. The preferred way forward as suggested by senior council officers is to start a tendering process to appoint a new development partner to deliver the scheme.

According to the report, the current on-site contractor Vinci has a break clause which can be triggered before the start of any construction work. Although it’s not specifically mentioned, it appears the trigger is being pulled. As such, another recommendation seeks approval from cabinet councillors to pay Vinci £45,00 a month while they remain on site until a development partner is secured. This sum covers what are described as “ongoing costs” such as hoarding hire, welfare, security cabins, utilities, site checks and security personnel.

Vinci were originally hired by the council in 2019 on a design-and-build contract. The first phase involved stripping out asbestos, some limited demolition and work to secure the mural while preparing and submitting the planning application for the phase two new-build scheme

The company has also built the new NHS Community Diagnostic Centre at the corner of the site overlooking Albion Street. Not part of the approved Albion Square plans, it was the equivalent of an after-thought, being added when NHS England approached the council in mid-2023 looking for a potential development site in the city centre.

The new health facility is expected to open later this summer with capacity to see up to 300 patients a day but grabbing that unexpected opportunity when it popped up two years has also created another hurdle to clear.

Recent changes to planning law following a Supreme Court ruling on an unrelated case mean the Diagnostic Centre represents a significant change from what was originally agreed in the planning approval for the Albion Square scheme. As such, it will be a case of going back to the drawing board when a new development partner is appointed.

That doesn’t automatically mean any drastic changes to the scheme but it does mean a new planning application needs to be submitted. The cabinet report says: “We expect that this will follow the previously agreed plans, although any development partner would be able to propose and submit their own plans for permission in due course should they wish.”

Which brings us neatly to what is going actually to be built there.

We’ve gone from the early idea of a new ice rink to the current plan for housing, offices, food and drink units and a creative industry start-up hub loitering under the unlikely name of The Matrix, currently supported by a yet-to-be spent £5m Levelling Up grant. As far as I’m aware, Keanu Reeves is not involved. The approved application also features an urban park sat in the middle of the development.

It now seems it will be up to the development partner to work out how all these different elements can be stitched together. Interestingly, for the first time since 2017, the report also suggests the option of refurbishing the existing building instead of simply flattening it is at least up for discussion.

Parts of it might look like Cold War East Berlin but it’s still standing.

The report says: “Whilst the previous planning application and target cost was for a new build scheme, the potential for a refurbishment scheme for Block B (BHS/Co-op) could be considered through a development scheme with a development partner. The procurement will therefore be agnostic on rebuild versus refurbishment.

“However, while refurbishment of Block B may appear to be a more attractive than a new build option, significant structural works would need to take place to the concrete frame to enable a refurbishment option to progress, and the number of housing units which could be realised is likely to be much lower, therefore the viability issue of the scheme may be less than that of a new build scheme.”

There’s also the financial nitty-gritty behind the project to consider.

According to the report, the council has already spent £22.5m on site acquisition, clearance, design, asbestos removal and completion of the Community Diagnostic Centre with £7.8m of that coming from external grants.

The third key recommendation is for councillors to allocate another £17m towards the project to plug a potential shortfall between the ultimate development cost and its actual value.

From the outset, the council’s gamble on investing big in Albion Square has been based on making its money back in the long term. The model envisages a private partner recouping its costs and more through residential sales and rents with the remainder being met by the council with an eye on future increased council and business tax revenue as well as commercial rental income.

Given all the twists and turns so far in the saga, the report concludes the new £17m allocation from the council is needed “to provide potential bidders with the required confidence in the process”. In other words, it’s a whopping subsidy and underlines the point that without it, the development would not be financially viable.

Assuming the cabinet backs the recommendations, a tendering exercise should get underway later this year.

As it always the case, the report includes a risk assessment of the options currently under review. While supporting the new suggested approach, it also provides a gloomy alternative vision to chew over.

“There is a risk through this approach that the procurement exercise fails to attract a development partner, and the council are left holding the undeveloped site and would need to demolish or secure the existing structure.”

Having followed the Albion Square story from the start, I know that’s an outcome no-one wants. In fact, I believe there are a couple of local development companies out there who might well be up for the job. Whether they come to the table remains to be seen.

As for that third story, watch this space..