Public procurement notice: Voluntary Ex Ante Transparency Notice
Published: 2019-11-08
Buyer: Knowsley Metropolitan Borough Council
Country: UK
Contract type: Works
Procedure: Negotiated without a prior call for competition
CPV classification: 44212381 | 45111000 | 45210000: Building construction work | 45213111 | 45213312
Estimated value: 21500000 GBP

Technical requirements: As part of the Knowsley Metropolitan Borough Council’s (the ‘Council’) ‘Strategy for Knowsley 2016-2020’, the Council has committed to delivering a new retail offering in Kirkby town centre in order to regenerate the area. The Council has identified a number of sites in the town centre area, that it wishes to purchase in order to achieve its regeneration objective. The sites are currently owned by St Modwen Developments (Kirkby 2) Ltd (‘St Modwen’). It is a condition of sale of the Site that the Council enter into a development management agreement with St Modwen under which St Modwen will design and build a retail development and manage the leasing of that development. The value shown in the section below is the current estimated value but may vary upwards or downwards.
The Council is acquiring further land interests in Kirkby Town Centre to facilitate regeneration. These are Kirkby Town Centre, on land north of Cherryfield Drive, Kirkby; the Shopping Centre known as St Chads Parade; and a bare development site known as land to the south of Cherryfield Drive which together comprise the ‘Sites’. All Sites are in Kirkby Town Centre. The Sites are currently owned freehold and long leasehold by St Modwen who have agreed to sell the Sites to the Council conditional on the Council entering into the Development Management Agreement (‘DMA’) with St Modwen.
Under the terms of the DMA, St Modwen will be responsible for the redevelopment of Kirkby Town Centre. This will include an obligation to procure, manage, monitor and supervise the design, construction and completion of a new retail development to be anchored by a Morrisons supermarket and more particularly defined under St Modwen’s planning consent authorising the erection of a mixed use development comprising a foodstore and non-food retail shops (Use Class A1) food and drink uses (Use Classes A3/A5), petrol filling station, car parking, landscaping, highways improvements and other associated works (including 3 electricity substations) on land bound by Norwich Way, Hall Lane, County Road and Irlam Drive, and the construction of a car park with ancillary works on land off Cherryfield Drive and Cherryfield Crescent dated 9.11.2017 and issued 20.11.2017 and referenced 17/00559/FUL).
St Modwen as current owner of the Sites is in the process of concluding prelets with 3 tenants, conditional on construction of the relevant units. Under the DMA St Modwen are also to be responsible for managing the leases of un-let space in the new retail development. The DMA also includes St Modwen carrying out car park works on the land to the South of Cherryfield Drive.
St Modwen intend to let the design and construction of the development to a main contractor. St Modwen shall also appoint letting agents. All design consultants have already been selected by St Modwen and/or the main contractor and they are also concluding the terms of a JCT contract to design and construct the development with GMI Construction Group plc (‘GMI’). Under the terms of the DMA, St Modwen will be obliged to procure collateral warranties (containing step in rights) in favour of the Council from the key design consultants, employer's agent and GMI.
The Council relies on Regulation 32(2)(b)(iii) to enter into a development management agreement with St Modwen.
As part of the Council’s ‘Strategy for Knowsley 2016-2020’, the Council committed to developing sustainable town centres. As part of this the Council would deliver a new retail, leisure and evening economy offering in Kirkby town centre.
The Council wishes to acquire land in and around the town centre in order to regenerate Kirkby town centre. St Modwen are currently the freehold and long leasehold owner of several strategic plots in Kirkby town centre that the Council wishes to acquire. There are no land owners within the centre other than the Council and St Modwen. The sites in question are on land north of Cherryfield Drive, Kirkby; the Shopping Centre known as St Chads Parade; and a bare development site known as land to the south of Cherryfield Drive (‘the Sites’) This notice concerns the Sites. St Modwen has exclusive rights over the Sites as the holder of the freehold and long leasehold interest with the reversion vested in the Council. St Modwen have agreed to the sale of the Sites to the Council, despite their existing exclusive rights, on the express condition that the parties enter into a Development Management Agreement simultaneously to a sale and purchase agreement. The Development Management Agreement will oblige St Modwen to deliver the works together with a number of design and build services. St Modwen will also be responsible for managing the leasing of the development.
Kirkby is a town of over 41,000 population. There is limited space suitable for this development. The relevant site is in the town centre and the Council has a longstanding commitment to new retail facilities in the existing town centre and in particular the provision of a retail foodstore. This proposal delivers that commitment. This site already has the benefit of planning permission for a retail park and has sufficient scale to deliver what is required by the planning permission in terms of parking, servicing and units.
This site has the benefit of 3 significant tenants already signed up to take leases within the retail park and therefore can be income producing for the Council and operational in the shortest amount of time.
There is no other site of equivalent scale in the town centre that can be delivered in the same timeframe at the same cost whether by private acquisition or by utilising CPO powers. There would be little benefit in the Council undertaking such a development from scratch in an alternative area as any new scheme would fail through competition with the current site. There is not sufficient capacity within Kirkby for 2 such retail parks.
The Council therefore has no option but to proceed with this transaction, bound by the position of St Modwen which has existing exclusive rights over the Sites, to ensure that the development is carried out without further delay which would be likely to result in detriment to the local area and local economy.
Under the DMA St Modwen will be required to award a building contract to GMI and manage it to deliver the development. Specialist construction contractors will undertake specialist works when necessary. St Modwen will sub-contract professional services necessary for a design and build contract and will appoint letting agents in respect of the requirement to manage the leasing of the development.


Winner: St Modwen Developments (Kirkby 2) Ltd
Award value: 21500000