Nicholas Street Precinct: Works set to start on retail precinct in Ipswich CBD

It is understood discussions have taken place with significant brands which have yet to set up elsewhere in Ipswich to open in the redeveloped CBD.

Ipswich City Council's new administration building in the Nicholas Street Precinct.

IPSWICH City Council will move ahead with work to overhaul its retail buildings as part of its $250 million redevelopment of the city’s CBD, despite a previous decision not to do so until 50 per cent of tenants were locked in.

That target has not been met but the council is “confident” with what has been agreed with businesses so far that it should go ahead with upgrades with an expected opening date of Easter 2022.

More than 750 council workers will start to move into the new administration building in the Nicholas Street Precinct at the end of the month.

Ipswich mayor Teresa Harding and Paul 'Campo' Campion at the official opening of Tulmur Place in the Nicholas Street Precinct in November.

A motion at last week’s council meeting was passed and $3.7 million in works to get spaces ready for new businesses will now proceed.

Not all councillors supported the move, with veteran elected representatives Sheila Ireland and Paul Tully voting against it.

Councillors Andrew Fechner - due to business interests in the CBD - and Jacob Madsen, due to his role with the Ipswich Trades Hall and Labour Day Committee in the city centre, were out of the room during discussion and voting.

Previously the council decided it would only proceed with final landlord works, initially forecast at $2.9 million, to retail spaces once agreement for leases for 50 per cent of the ‘Metro B’ tenancies were executed.

That mark has not been met, with only commercial terms agreed with eight potential tenants and no leases secured.

It is understood discussions have taken place with significant brands which have yet to set up elsewhere in Ipswich to open in the redeveloped CBD.

The organisation flagged the time and money that will be lost if Hutchinson Builders has to move off site in the middle of a building boom only to have to come back at a later date to complete the works.

Overall, the council is spending $18.9 million on the upgrades to its ‘Metro B’ and ‘Eats’ buildings with more to be spent on an upgraded cinema complex.

“We’ve got to a point where we feel quite comfortable with momentum,” Retail Sub-Project Steering Committee chair James Hepburn told councillors.

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“To date over 50 per cent of our leasing deals are now in either their heads of agreement or in legals and we have two more that are coming through that take us up to 68 per cent so we feel comfortable enough now to relinquish the 50 per cent hurdle rate.

“Where we stand right now it’s essentially aiming to open ‘Metro B’ and ‘Eats’ for Easter next year.

“If we don’t relinquish the 50 per cent and we don’t allow the construction to continue with its current program we’ll put that date at risk.”

Delays in securing tenants was put down to the economic impacts of COVID-19 and the prolonged search for a cinema operator, which is identified as key to the success of the precinct.

The motion also included endorsing additional capital incentive to attract businesses into the precinct which council officers say is “required” to meet the “current leasing market’s requirements”.

“As market conditions have slowed and entry to new space has become harder to access by the incoming tenant, landlords have had to help de-risk this process,” a report to councillors noted.

“The barriers to enter new space in a new market are predominantly the cost of fit-out and business set up and establishment.

“These costs are generally split between landlord and tenant (rent free periods/rent abatements and capital incentives to cover entry costs).

“COVID-19 has had a significant effect on entry costs, with tenants now demanding full capital incentives to de-risk cost to entry.

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“Amendments to this budget will allow the leasing and delivery team to negotiate the most sustainable landlord tenant relationship to sales, dwell time and re-establish the precinct and city centre of Ipswich.”

The requirements of these incentives are confidential and cannot be released to the public.

An extra 28 sqm in extra floor space has been identified in ‘Metro B’.

“This space can deliver new value to establish improvements to overall financials, tenant mix and ability to allow for a retail/service orientated business to anchor the internal mall of Metro B,” the report notes.

“This will add to the overall strength of the pitch, neighbouring tenant sales and ability to attract quality tenants now and into the future.

“The ability to make use of a redundant 28 sqm of space and introduce a new tenant will significantly improve the viability of the internal mall in Metro B.

“It is proposed that the required funds for both capital incentives and the Metro B value adding new works be included in the 2021/22 budget to be adopted by council in late June 2021.”

The QT contacted councillors Ireland and Tully and asked why they voted against this latest development in the prolonged redevelopment of the CBD but they did not respond.

They were both in office when the council bought Ipswich City Square in 2009.

It was revealed a decade later Ipswich City Properties, the council-owned company tasked with managing the redevelopment of the CBD, had lost $78 million.

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Originally published as Nicholas Street Precinct: Works set to start on retail precinct in Ipswich CBD