Ambitious plans for a new international market in Aberdeen could use up half of the council’s £150 million war chest for the city’s Covid recovery.
Eye-catching designs for the development on Union Street, on the site of the former British Home Stores branch and indoor market, emerged in May.
And Aberdeen Journals has been given exclusive access to internal council briefing documents, outlining the potential costs of bringing the plans to fruition.
We can reveal senior officials told councillors that the preferred option for what’s being called Aberdeen International Market could cost nearly £75m.
That would use half of the £150m cash reserve put aside in the local authority’s budget to help pay for the next phase of the city centre masterplan, between now and March 2026.
Along with the plans for BHS, councillors are also considering a radical shake-up of city centre roads including pedestrianisation of Union Street, as well as the potential for a new football stadium and leisure facilities at the beach.
Exclusive: First indication of the cost of new Aberdeen International Market
Financial details behind the market proposals have remained closely guarded – until now – as Town House chiefs thrashed out a deal to purchase the disused premises.
Within the headline £74.7m figure, the construction of the new market is expected to cost around £46.5m.
It is not clear if this cost would include pedestrianising Union Street from Market Street to Bridge Street – if councillors vote to “prioritise” those long term plans at a meeting later today.
The two projects have been linked ever since the first sketches of the new market proposals showed people strolling along the car-free stretch.
The UK Government has been asked to put £20m towards the market plans through the post-Brexit Levelling Up Fund, but council sources have told us of concerns the £150m might not last the whole five years it is meant to.
In November, councillors are expected to make final decisions on the many city regeneration projects beginning to emerge, once full business cases are published, making it clear how far the millions will go.
What does tens of millions of pounds buy you in Aberdeen?
Work under city centre masterplan, first agreed in 2015, has already totalled millions.
Plans for a residential quarter in Queen Street, once the police headquarters is demolished, are forecast to cost £150m alone.
Across the road, Marischal Square was completed in 2017 for £107m, while the refurbishment of the art gallery eventually cost £34.6m.
Meanwhile, as the new-look Union Terrace Gardens nears completion, the project is still expected to come in on budget at £28m.
Council city growth convener Ryan Houghton was quick to dismiss concerns the £150m cash pot could not be made to go far enough.
He told us: “At the budget meeting in March the administration agreed to allocate £150m to accelerate plans for the city centre and bring forward much-needed investment at the beach.
“The SNP decided not to support these plans proposing instead to manage the decline of Union Street and the beach without any investment or ideas.
“The administration also agreed to submit a proposal to the UK Government as part of the Levelling Up fund.
“The committee has a report in front of it today which allows the council to move forward with the new international market, formerly BHS store.
“As part of the proposals for the beach, Union Street and international market, businesses cases will be brought back to the committee in November to allow councillors to assess the feasibility of the various projects with a view to legally committing thereafter, all of which will be within the £150m budget.”
Aberdeen International Market: BHS and indoor market demolition could be well underway by Christmas
Council chiefs hope the market plans will draw people back to the city centre as a “destination venue” with an array of food and drink stalls, cafes, delicatessens and other outlets, while also creating a better planned link between the Granite Mile, the Merchant Quarter and the bus and train stations.
Developer First Endeavour, which recently bought the BHS and indoor market properties from investment firm Patrizia, is already understood to be on-site, preparing the buildings for demolition.
Their involvement in the project suggests, according to the council documents, that the final cost to the public purse will be between £72.8m and £74.7m.
The preferred option by the top council brass, which is the more expensive of the two, would transfer all risk on to the developer for the purchase and demolition, as well as the redevelopment and leasing of new market.
For the £74.7m, the local authority would effectively get an all-inclusive deal, outsourcing the cost of overcoming any hurdles in the project.
It would also include the cost of buying up more empty properties on the Granite Mile – as the council eyes up empty flats above the former department store as they become vacant.
The £72.8m option 4a would leave the council financially exposed on the redevelopment costs and on finding tenants when the work is completed.
The confidential council briefing note reads: “This option should be considered as part of the full business case although it does not achieve the full risk transfer arrangements sought by Aberdeen City Council in relation to the site redevelopment and occupancy risk.
“But it would be considered if full risk transfer is not achievable, as the cost may be prohibitive.
“The outline business case identifies that there is market failure and the site is unlikely to be developed without council intervention.”
In a confidential brief prepared for the committee’s meeting this afternoon, council chiefs have confirmed the acquisition of BHS, the indoor market and 101 Union Street – which houses a bridge linking the two larger properties – has now been completed.
The purchase, which also includes the demolition of the existing buildings, is thought to have cost somewhere in the region of £8.5m.
Earlier this month, we told of the council taking control of the sites with hopes the existing properties could be felled by Christmas.
Along with option one, to do nothing, option two – a £25.2m refurbishment of the existing buildings for rent – was not considered viable by officials.
Option three was ruled out after Patrizia sold up to First Endeavour.