A catalogue of concerns about the way the project is progressing was yesterday put to the Corporate Services Scrutiny Panel, which is investigating the viability of the scheme.
- The Jersey Development Companys plans for the Jersey International Finance Centre on the Esplanade car park site include six new buildings.
- Proposals were put forward in December for the third building in the scheme, which the Jersey Development Company described as a clear sign of progress and interest in modern office space
- To date, the organisation has secured planning permission for two large office blocks as well as the underground parking that will form part of the overall plans.
- If approved, the latest plans would provide 69,000 square feet of office space in a building overlooking the roundabout on Route de la Libération.
- Under the plans, a number of parking spaces have been relocated to unused scrubland near Jardins de la Mer while the work is carried out.
Chartered surveyor Ben Ludlam, the group property director for C Le Masurier Ltd, gave evidence to the panel after being invited to make submissions for the scrutiny review.
The panel acknowledged Mr Ludlam’s potential commercial interest in seeing the Jersey Development Company’s plans stall, however, he told the panel that he had formally raised concerns with the States about developing the Esplanade long before he came to be employed by C Le Masurier Ltd.
At the end of last month it was announced that Swiss investment bank UBS had agreed to lease 16,350 sq ft of the first building of the finance centre.
That tenancy deal amounts to around 25 per cent of the first building of the JIFC, which proposes building 470,000 sq ft of office space in total.
CSSP vice chairman Deputy Simon Brée asked Mr Ludlam: ‘Were you to go to a bank today and put a proposal to them that they should lend based on a 25 per cent level of pre-lets, do you think you would be successful?’
Mr Ludlam replied: ‘Absolutely not.’
Neither Treasury Minister Alan Maclean or senior figures at the JDC have confirmed details of the agreement with UBS, but it is rumoured that the business may benefit from a two-year period of free rent as part of its deal.
However, Mr Ludlam told the panel that under normal conditions smaller long-lease agreements usually involved up to one year’s free rent.
He explained that it was only larger deals – for example the 88,000 sq ft of office space taken by the Royal Bank of Canada in Dandara’s Esplanade office, that could attract free-rent for longer than 12 months.
And going on to describe the development process, Mr Ludlam said that a risk-averse organisation would normally seek to secure deals to fill 70 to 75 per cent of an office block before starting to build.
Earlier this week the JDC confirmed to the CSSP that it would only finish the areas let by UBS, with the rest of the construction stopping after the ‘shell and core’ was built.
This would mean that the remaining office fit out would be done at a later stage.
Mr Ludlam said: ‘It is not the standard industry norm not to fit out all of the building.’
The chartered surveyor also reminded the panel that the former managing director of the Waterfront Enterprise Board – the forerunner of the JDC – wrote to senior Ministers in 2011 to outline concerns about a potential mismatch of proposed office development compared to the market demand.
The JEP will tomorrow be putting a series of key questions about the Jersey International Finance Centre to senior ministers and leaders at the JDC.
