'Very good' supermarket offer risks delaying town square for decade

A long-planned public square in the heart of Sydney is at risk of remaining on the drawing board for at least another decade.

The City of Sydney is considering extending Woolworths' lease on a well-known building it has long occupied opposite Town Hall until late 2030, after receiving a "very good offer" from the supermarket giant.

It presents a conundrum for the council: decline the offer and a subsequent boost to its depleted coffers amid an economic slump or accept it and further delay a city-shaping project.

An artist's impression of the proposed Town Hall Square.

The long-term extension of the lease would put off the council realising a plan – first devised in the 1980s by then lord mayor Doug Sutherland – to demolish the Woolworths building and others it has purchased over the past three decades, and allow construction of the square.

Four further five-year leases beyond December 2030 for the building, on the corner of Park and George streets, are also under consideration. The council would be able to break those leases with 12 months' notice if it decided it wanted to demolish the building.

Deputy lord mayor Jess Scully told a meeting last week that the council faced a "difficult financial situation" and that an increase to the lease payments from Woolworths would be an economic boost.

"It will be a very important revenue stream in the context of the budgetary impact of COVID-19 and its slowdown of the city," she said.

The well-known Woolworths building on the corner of Park and George streets.Credit: Michelle Mossop

The City, one of the wealthiest councils in the state, has estimated revenue will drop by up to $75 million over a six-month period due to the downturn.

While noting the "dire economic stress" the pandemic was causing, Sydney lord mayor Clover Moore said the council needed to have a "really careful look" at the length of the lease because the public square had long been mooted.

Councillor Linda Scott agreed the term of the lease was a "very significant decision for the future of the city", adding that the council had proposed the square for a long time.

City chief executive Monica Barone said the council still needed to buy a number of properties at a cost of "many tens of millions ... before we can even think about doing the project", adding that the impact of the pandemic had "probably set us back".

She described Woolworths' approach to renew the lease on six floors including the basement — terms of which are confidential — as a "very good offer".

The square is in the council's long-term strategic plan and would complement the George Street pedestrian and light rail boulevard.

Last year, the council opposed plans for a 183-metre tower to be built on the eastern edge of Darling Harbour on the basis that it would overshadow the long-mooted public square.

Councillors will again consider Woolworths' proposal at a meeting on Monday night.

The council purchased the Woolworths building in 1985, which included the retailer's then 40-year lease agreement.