A Council cabinet meeting on 23rd April will consider the sale of the freehold of council-owned land in Edward Street upon which the existing American Express European headquarters building is located. The local authority does not normally sell land and American Express was instead granted a long lease when it constructed the building in 1977. Should the land be sold now?
The 28,000 sq metre Amex House (nicknamed The Wedding Cake) was constructed at a cost of £10m over 30 years ago and remains an iconic building housing over 3,000 employees. Like the Brighton Centre, which was built at about the same time, it is now an ageing design and American Express want to acquire the freehold ownership to unlock the development of the land that they own to the north of the HQ site (click on link below for a map) and have the flexibility to replace the existing building when the time comes.
They want the flexibility to masterplan the entire site to allow for their the long-term future space planning. The company’s Global Real Estate Board have confirmed proposals for a new 24,000 sq metre office complex to the north of the existing building (see earlier story), which would almost double Amex’s employment capacity in the city.
The new complex would be the company’s third largest employment site in the world and would undoubtedly secure their long-term commitment to the city for generations.
ECONOMIC PARTNERSHIP COMMENT
The Council is quite right to be protective of its freehold assets. It is one of the largest property owning local authorities in the country and the income derived from leases is a valuable contribution to the considerable cost of running the city.
However, the protection of assets has to be balanced against our long-term needs and Amex is a global company that can relocate anywhere in the world.
There is no suggestion that Amex is in any way holding a gun to the council's head (they have made it clear that the request to purchase the freehold is an operational and property decision and is not something aimed at achieving financial advantage) but their loss would be immense if they looked elsewhere to expand. It is estimated that they account for something in the region of 7% of the entire economy of the city.
In addition the City Employment & Skills Plan has identified a need for an additional 16,000 jobs over the next 10 years if we are to accommodate our growing population and reach an 80% employment rate. Ideally we want to generate jobs that pay above average wages and that are based locally so that residents do not have to commute.
The situation is not without precedent. The sale of the freehold of Churchill Square to Standard Life in the 1990’s demonstrated the enormous advantages of sometimes letting go of a freehold transforming a decrepit, embarrassing 1960’s failure into one of the most successful city centre shopping malls in the south-east.
The Amex site is a similar situation. With the appropriate safeguards in place, the release of this land will secure literally thousands of good jobs with clear, strong career progression routes in a global company. The local authority should sell the freehold to American Express.
Click here to download Amex development site land ownership
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