The summer has been, autumn is approaching but nothing has really changed at the Carriageworks.
The last significant development was the completion of the S.106 agreement and the final grant of planning permission in July.
The next steps that Fifth Capital need to take are:Completion of the purchase of the site from Comer Homes. We understand that Fifth Capital will buy the special purpose vehicle that owns the site, rather than take a conveyance of the land.
- Agreement with the end purchaser. We understand that Fifth Capital are in negotiations for a housing association to buy the completed development. The last community meeting supported a housing association owning and managing the units in the private rented sector as opposed to it being in a proliferation of small private owners and landlords.
- Agreement with the contractor. The cost of building the scheme has got to be less than the final sale price plus the developer’s profit element. There has been a lot of inflationary pressure in the construction industry and Brexit has added to the
uncertainties. This makes for a difficult negotiation.
We’re hoping to get an update on these issues from Marc Pennick of Fifth Capital now that the summer holidays are over (we’ve had a couple of conversations with him through August but he and his advisors have been away much of the time).
Once we know more, and hopefully get confirmation that Fifth Capital have ownership of the site, we will call a community meeting to discuss all the other topics of interest:
- Timescale for development from demolition through to flats and commercial units being ready for occupation
- Managing the impact of construction on local residents and businesses
- Management of the ground floor units and market
- Proposals for public art and the cultural strategy
- Ongoing opportunities to have a say in the scheme
Just one more thing to add; the Carriageworks has been shortlisted for a Sunday Times British Homes Award. Nothing to do with community engagement sadly, just the architecture. 
More at http://britishhomesawards.co.uk/shortlist (scroll down to Category 12 – Housing Project). Winners will be announced on 14 October. And if you’ve got £1,920 to spare you can even have your own table at the awards lunch in London!
That’s it for now. We’ll let you know more when we know more.
Lori and the Liaison Group
Having been a local resident for some years now (I live virtually next door to the Carraigeworks) it’s of course pleasing to hear that this unused building will be put to good use and provide much needed homes for people.
However, I cannot help but feel at bit sceptical about the time this has taken, let alone the issues surrounding the profits involved in this whole project. And as someone with limited knowledge about developments, planning permission and the like, I can’t help but think there will be a small number of people (par for the course) who’ll inevitably make a lot of money out of all this.
Hi Paul.
Thanks for your comment. It is taking a long time and while we understand the developer’s reasons it doesn’t reduce the frustration.
I’ll try to answer your point about profits but bear with me if it starts to feel like a tutorial in development economics!
There are two costs for any development:
1. the cost of the land,
2. the cost of construction
For a development to be viable, these costs must be less than the value of the completed development. The difference between them is the developer’s profit i.e. the developer’s reward for putting in the work and taking the risk.
When assessing whether a development will stack up, the profit margin is usually taken as about 20% of the value of the completed development or 25% of the cost of development (i.e. the land plus the construction cost). That figure might vary according to the size of the scheme, the details of the risks, the size of the developer etc.
If the cost of a development starts to go up, the first thing to be squeezed is the profit element. If things go badly wrong the profit might disappear altogether leaving the developer breaking-even at best.
The Carriageworks will be a difficult site to the develop. It has very restricted access, there are lots of neighbours, the roads are congested, there’s a lot of difficult demolition and there’s a Grade II* listed building to restore. The risks are therefore considerable and will take a lot of skill and care to properly manage. Construction will cost something like £24m, so there’s a lot at stake.
At the community meeting in September 2015 Fifth Capital told us that they had reduced their target profit margin from 20% to 17% to make the scheme work. That still means that they are hoping to make about £4m out of the scheme but if things go wrong that sum could quickly shrink. If the developer had a lower target profit – say £1m – that would still be a lot by most people’s standards but the financiers would probably say that it left insufficient margin for error and that they would not lend. The site would probably then remain derelict.
Hope that helps explain why the profit is there!
Julian
It’s time to reactivate ourselves and our communities. 5th Capitol made a public commitment to be on site by October/November. Nothing has happened, apart from a string of excuses.
Nows the time to reactivate The Compulsory Purchase process. We need to know that money is still available.
Please contact you Councilors and ask them.
After all this £ 200,000 could easily be re allocated to pay off the councils huge dept. P