News / Temple Island
Deal for land previously earmarked for arena gets worse for council
A deal for a flagship development of hundreds of new homes, offices in blocks up to 19 storeys, and a hotel and conference centre is about to become a whole lot worse for Bristol City Council.
The council has already committed £32m to clear up Temple Island and pave the way for building works.
The derelict former diesel rail depot next to Temple Meads was previously earmarked for an arena and called Arena Island before being cancelled by then-mayor Marvin Rees.
It has taken four years for the site to be decontaminated ahead of developers Legal & General transforming the land with a £350m investment, which will take about a decade to complete.
But a Bristol City Council report now says the deal signed with L&G in 2022 – which promised 40 per cent of the 520 homes would be classed as affordable and included the council guaranteeing office rent to the financial company for 40 years, estimated at £2m a year – was no longer viable.
The report says both factors have moved significantly away from being in the council’s favour, meaning it will have to pick up more costs to keep the project, part of the wider Temple Quarter and St Philip’s regeneration, on track.
The report, set to be approved by the strategy and resources committee on Monday, said that the land value had plummeted because of a 35 per cent increase in building costs since 2022 and new safety regulations.
But at the same time, demand and pricing for ‘Grade A’ office space in central Bristol have risen sharply.
This all means that without a fresh agreement, the 2022 deal could not deliver the development.
So the committee is asked to halve the proportion of affordable homes from 40 per cent to 20 per cent – a figure which became clear months ago ahead of L&G securing planning permission in April – but even then this is dependent on a grant from Homes England.
The council, which will sublet the offices, will also have to pay more guaranteed rental income to L&G – a figure which is either unknown, yet to be agreed by officers under delegated authority or unavailable to the public.
Legal & General say the designs for Temple Island “will create a new landmark on this prominent city centre site that work with the grain of Bristol’s architecture” – image: L&G
The report says: “As the prevailing rents for Grade A office space have increased significantly since 2022, it is proposed that the rental guarantee is now valued proportionately higher so that it can still contribute to the development viability.”
It says the figures were commercially sensitive and contained in an exempt report.
The report continues: “The proposed lease arrangement creates a long-term revenue commitment for the council.
“There is a risk that income generated from office occupiers may be insufficient to meet lease payments to L&G due to void periods, slower-than-anticipated occupation, market rent fluctuations, rent-free incentives, operating costs or wider market changes.
“This may create a revenue budget pressure, particularly during the early years of occupation.”
Temple Island was previously earmarked as the site for Bristol’s long-awaited arena – image: L&G
Bristol City Council finance officers wrote: “Finance supports the principle of the proposed variation as a pragmatic route to progressing the scheme in current market conditions.
“However, members should be clear that the decision creates a long-term revenue exposure for the council and that the financial position will require active monitoring and management over the life of the lease.”
Main photo: Martin Booth
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