Decision details

Consideration was given to a report that provided Cabinet with an update on the vacant employment land at Durham Lane Industrial Estate that the Council purchased with Indigenous Growth Fund (IGF) monies in July 2021 in order to safeguard the site and bring forward development.  A preferred developer had been selected to deliver a business park, subject to completion of legal contracts.  The report sought authority to dispose of the land to the developer.

In January 2020, Cabinet approved the acquisition of vacant, undeveloped employment land at Durham Lane Industrial Park at Market Value to safeguard strategically important employment land.  The site was purchased in July 2021 for £2.8m using IGF monies. Durham Lane was a key element of the Council’s IGF Strategic Initiatives Programme which sought to promote inward investment, unlock employment land, support existing business growth, and be a catalyst for economic growth and job creation across the borough.

Since July 2021, numerous site surveys along with an options appraisal had been commissioned in order to better understand the sites opportunities and constraints; essentially completing due diligence to make the site more attractive to a developer.

In summer 2022 Knight Frank were appointed as the Council’s land agents following an engagement process.  DWF were also appointed as the Council’s legal advisors using the NEPO framework.  It was agreed following advice from DWF that the site should be dealt with as a land disposal as The Public Contracts Regulations 2015 would not apply, but that certain conditions should still be included as part of the land transaction to ensure the Council’s aspirations for the site are delivered and to minimise risk to the Council. 

Knight Frank marketed the site on behalf of the Council to attract a developer.  They advised on the strategy and produced a marketing brochure which was supported by an SBC Design Code for the site.  The site was marketed between May and July 2023 via a mailshot to potential developers and agents, Knight Frank, EG Propertylink, Rightmove Commercial and Invest Stockton-on-Tees websites, and in the Estates Gazette, accompanying website and dotmailer to their subscriber list which boasts UK coverage.  The advert had a really good response with 28 enquiries received, with several requests for access to the Data Room which held detailed information on the site including the topographical, archaeological, drainage, flood, ground investigation and ecological surveys that had been completed since SBC purchased the site. 

Interested developers were requested to submit an initial bid proposal for the site by 12th July 2023. 5 Expressions of Interest bid proposals were submitted for consideration which Knight Frank considered a good response. The 5 bid proposals were shortlisted to two by SBC, Knight Frank and DWF based against a criteria of requested information to demonstrate the bidders financial resources, track record and proposed delivery of a scheme at Durham Lane. A period of competitive dialogue and interviews took place in October, and in November a developer was selected as the Council’s preferred development partner. 

The preferred development partner was recommended by Knight Frank as they can demonstrated their ability to develop on a magnitude similar to Durham Lane and had a knowledge of end users of a scale and size from outside the North East which would be beneficial to attract to the site.  The developer’s ambitions were also more aligned with the Council’s in terms of removing obstacles to efficient development, improving the offer of the estate and they aimed to achieve BREEAM excellent rated buildings.  They had a strong ‘in-house’ and external professional team and the financial information provided also demonstrated that they were the stronger company with greater financial resources to call upon than most of the other parties.  Detail of the preferred developer partner was commercially sensitive and was included at Exempt Appendix A of the report.  It was proposed that the land was drawn down to the preferred development partner under the terms set out in the Development Agreement. 

The preferred developer was working with the Council and key partners, at risk, to better understand Durham Lane’s opportunities and constraints and develop the masterplan.  An Exclusivity Agreement had been signed with the preferred developer until 31st March 2024 whilst the legal contracts were being drawn up.  They had committed to submitting a planning application soon after the agreement was signed and intended to deliver the project on a phased basis.  They had committed to defraying £3m IGF grant monies by March 2026 on infrastructure improvements to unlock the land for development. 

Initial Heads of Terms had been provisionally agreed by both parties and lawyers were working to complete a Development Agreement.  The detail was commercially sensitive and included as Exempt Appendix A.

The development of the strategically important, vacant employment land at Durham Lane will attract inward investment, support existing business growth and allow the Council to realise additional economic value as a result of job generation and social value through our partnership approach with the preferred developer.

The Council was committed to maximising the impact of its public expenditure for the benefit of the local economy, the environment and wider society and communities, and this was being delivered through embedding strong Social Value policies through our partnership approach with the preferred developer. Social Value was an ability to determine and measure what was created as added value through a contracts and commissioning processes, considering more than just the financial transaction but what added benefits the Council wished to achieve.

The preferred developer had committed to delivering social value objectives and would be required to prepare an Employment and Skills Plan.

RESOLVED that:-

1. The disposal of land at Durham Lane Industrial Estate be approved on a phased basis to the preferred developer, in accordance with the details outlined in this report and Appendix A and in accordance with the Development Agreement subject to recommendation 2 below. 

2. Delegate authority be given to the Assistant Director - Inclusive Growth and Development in consultation with the Leader of the Council and Cabinet Member for Regeneration and Housing, to agree the detailed terms of the disposal and the Development Agreement.

3. Cabinet note that any money received from the sale of the land is required to be spent in line with the TVCA IGF criteria.

To provide Members with an update on Durham Lane Industrial Estate and seek approval to dispose of the land to a preferred developer.