Liverpool Council is set to fund the entire £60 million Pall Mall office development after failing to attract an external investor, according to new cabinet documents. The council-owned site, formerly Bixteth Street Gardens, will deliver the first grade A office space in the city centre in over a decade.
Council to Acquire Completed Development
The local authority will take ownership of the completed site in 2028, funding the project through borrowing from the Public Loan Works Board. More than £20 million will be borrowed to meet the full cost, with the council planning to sell the development later to recoup its outlay. The previous funding model, which relied on a Ministry of Housing, Communities and Local Government (MHCLG) Strategic Futures grant and an institutional forward-funder backed by a 15-year rent guarantee, failed to secure a willing backer.
Project Timeline and Pre-let Requirement
Any funding is subject to a pre-let occupier being secured. The cabinet report states that the new structure “will provide more certainty to potential occupiers of Pall Mall that the project will proceed and start on site in Q1 2027.” VINCI Construction was appointed as design and build partner last week, marking the next phase of progress. The project follows Chancellor Rachel Reeves’ May announcement of government backing through the Liverpool City Region Combined Authority’s £2 billion Investment Fund.
Challenges in the Office Investment Market
The council acknowledged that the previous funding model had “proven challenging in the current office investment market.” Additional LCRCA funding and Section 106 cash are also being used. Kier Property and retained letting agents must secure occupiers before the council commits. The report notes: “The timing of this sale will be determined largely by the occupational status. Financial modelling has been undertaken to assess the potential financial impact to the council in holding the asset short-term after completion.”
Warning for Future Developments
The documents caution that committing to Pall Mall could affect other projects: “The council will need to be mindful before committing to Pall Mall that other projects brought forward at exactly the same time could mean slower occupancy and/or slower rental growth in the central business district and therefore could have some impact on the assumptions within the council’s financial modelling.” This may also apply to existing office accommodation, though it may not offer the same quality or sustainability credentials.
