IPSWICH
CITY
COUNCIL
AGENDA
Special Meeting of the Ipswich Central Redevelopment Committee
Tuesday, 23 January 2024
11.00 am
Council Chambers, Level 8
1 Nicholas Street, Ipswich
IPSWICH
CITY
COUNCIL
AGENDA
Special Meeting of the Ipswich Central Redevelopment Committee
Tuesday, 23 January 2024
11.00 am
Council Chambers, Level 8
1 Nicholas Street, Ipswich
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MEMBERS OF THE Ipswich Central Redevelopment Committee |
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Councillor Marnie Doyle (Chairperson) Councillor Kate Kunzelmann (Deputy Chairperson) |
Mayor Teresa Harding Deputy Mayor Russell Milligan |
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Ipswich Central Redevelopment Committee Special Meeting Agenda |
23 January 2024 |
Ipswich Central Redevelopment Committee AGENDA
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Item No. |
Item Title |
Page No. |
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Welcome to Country or Acknowledgment of Country |
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Declarations of Interest |
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Business Outstanding |
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Officers’ Reports |
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1 |
**Nicholas Street Precinct - Approval of a Lease for Tenancy 2B10 Tulmur Walk (8 Nicholas Street) |
8 |
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2 |
**Nicholas Street Precinct - Approval of an Agreement for Lease for Tenancy MM1 Venue (37 Nicholas Street) |
16 |
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3 |
**Nicholas Street Precinct - Approval of an Agreement for Lease for Tenancy T1 Venue (37 Nicholas Street) |
24 |
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4 |
**Nicholas Street Precinct - Approval of an Agreement for Lease within the Nicholas Street Car Park (11 Nicholas Street) |
32 |
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Notices of Motion |
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Matters Arising |
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** Item includes confidential papers
Ipswich Central Redevelopment Committee NO. 1
23 January 2024
AGENDA
Welcome to Country or Acknowledgement of Country
DECLARATIONS OF INTEREST IN MATTERS ON THE AGENDA
BUSINESS OUTSTANDING
Officers’ Reports
1. **Nicholas Street Precinct - Approval of a Lease for Tenancy 2B10 Tulmur Walk (8 Nicholas Street)
This is a report concerning a lease for council’s consideration associated with Tenancy 2B10 within Tulmur Walk at 8 Nicholas Street, Nicholas Street Precinct.
Recommendation
A. That Council enter into a Lease (and any ancillary documentation) with the proposed lessee of the Tenancy 2B10, Tulmur Walk Building, 8 Nicholas Street (impacting part of Lot 1 RP157021) (“Tenancy 2B10”) within the Nicholas Street Precinct (under the commercial terms detailed in the confidential report and attachments by the Project Manager dated 16 January 2024).
B. That Council note, that in relation to Council’s disposal of its leasehold interest in the Tenancy 2B10 to the proposed lessee, that the Ministerial exemption under s236 1(f) of the Local Government Regulation 2012 applies to the disposal of Council’s interest in Tenancy 2B10 (Ministerial exemption contained in Attachment 1 of this report).
C. That pursuant to Section 257(1)(b) of the Local Government Act 2009, Council resolve to delegate to the Chief Executive Officer the power to take “contractual action” pursuant to section 238 of the Regulation, in order to implement Council’s decision at Recommendation A.
D. That Council be kept informed as to the progress and outcome of the execution and publication of details.
2. **Nicholas Street Precinct - Approval of an Agreement for Lease for Tenancy MM1 Venue (37 Nicholas Street)
This is a report concerning an
Agreement for Lease for council’s consideration associated with Tenancy
MM1 on the ground level of the Venue building at
37 Nicholas Street, Nicholas Street Precinct.
Recommendation
A. That Council enter into an Agreement for Lease and associated documentation of the Agreement for Lease with the proposed lessee for Tenancy MM1 in the Venue Building (impacting part of Lot 1 on RP209886) (“Tenancy MM1”) within the Nicholas Street Precinct (under the commercial terms detailed in the confidential report and attachments by the Project Manager dated 16 January 2024).
B. That conditional upon Council satisfactorily executing the Agreement to Lease with the proposed lessee, (contained in recommendation A of this report), Council enter into a lease for Tenancy MM1 with the proposed lessee (as detailed in the confidential report and attachments by the Project Manager dated 16 January 2024).
C. That Council note, that in relation to Council’s disposal of its leasehold interest in Tenancy MM1 to the proposed lessee, that the Ministerial exemption under s236 1(f) of the Local Government Regulation 2012 applies to the disposal of Council’s interest in Tenancy MM1 (Ministerial exemption contained in Attachment 1 of this report).
D. That pursuant to Section 257(1)(b) of the Local Government Act 2009, Council resolve to delegate to the Chief Executive Officer the power to take “contractual action” pursuant to section 238 of the Regulation, in order to implement Council’s decision at Recommendations A and B.
E. That Council be kept informed as to the progress and outcome of the execution and publication of details.
3. **Nicholas Street Precinct - Approval of an Agreement for Lease for Tenancy T1 Venue (37 Nicholas Street)
This is a report concerning an Agreement for Lease for council’s consideration associated with Tenancy T1 in the ground level of the Venue building at 37 Nicholas Street, Nicholas Street Precinct.
Recommendation
A. That Council enter into an Agreement for Lease and associated documentation of the Agreement for Lease with the proposed lessee for Tenancy T1 in the Venue Building (impacting part of Lot 1 on RP209886) (“Tenancy T1”) within the Nicholas Street Precinct (under the commercial terms detailed in the confidential report and attachments by the Project Manager dated 16 January 2024).
B. That conditional upon Council satisfactorily executing the Agreement to Lease with the proposed lessee, (contained in recommendation A of this report), Council enter into a lease for Tenancy T1 with the proposed lessee (as detailed in the confidential report and attachments by the Project Manager dated 16 January 2024).
C. That Council note, that in relation to Council’s disposal of its leasehold interest in the Level 1 Tenancy to the proposed lessee, that the Ministerial exemption under s236 (f) of the Local Government Regulation 2012 applies to the disposal of Council’s interest in the Level 1 Tenancy (Ministerial exemption contained in Attachment 1 of this report).
D. That pursuant to Section 257(1)(b) of the Local Government Act 2009, Council resolve to delegate to the Chief Executive Officer the power to take “contractual action” pursuant to section 238 of the Regulation, in order to implement Council’s decision at Recommendation A.
E. That Council be kept informed as to the progress and outcome of the execution and publication of details.
4. **Nicholas Street Precinct - Approval of an Agreement for Lease within the Nicholas Street Car Park (11 Nicholas Street)
This is a report concerning an Agreement for Lease for council’s consideration located within the Nicholas Street Car Park, 11 Nicholas Street, Nicholas Street Precinct.
Recommendation
A. That Council enter into an Agreement for Lease and associated documentation of the Agreement for Lease with the proposed lessee for Tenancy CW (12-16 car parks) within the Nicholas Street Car Park (impacting part of Lot 1 on RP307972) (“Tenancy CW”) within the Nicholas Street Precinct (under the commercial terms detailed in the confidential report and attachments by the Project Manager dated 16 January 2024).
B. That conditional upon Council satisfactorily executing the Agreement to Lease with the proposed lessee, (contained in recommendation A of this report), Council enter into a lease for Tenancy CW with the proposed lessee (as detailed in the confidential report and attachments by the Project Manager dated 16 January 2024).
C. That Council note, that in relation to Council’s disposal of its leasehold interest in the Nicholas Street Car Park to the proposed lessee, that the Ministerial exemption under s236 (f) of the Local Government Regulation 2012 applies to the disposal of Council’s interest in Tenancy CW (Ministerial exemption contained in Attachment 1 of this report).
D. That pursuant to Section 257(1)(b) of the Local Government Act 2009, Council resolve to delegate to the Chief Executive Officer the power to take “contractual action” pursuant to section 238 of the Regulation, in order to implement Council’s decision at Recommendation A.
E. That Council be kept informed as to the progress and outcome of the execution and publication of details.
NOTICES OF MOTION
MATTERS ARISING
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Ipswich Central Redevelopment Committee Special Meeting Agenda |
23 January 2024 |
ITEM: 1
SUBJECT: Nicholas Street Precinct - Approval of a Lease for Tenancy 2B10 Tulmur Walk (8 Nicholas Street)
AUTHOR: Project Manager
DATE: 16 January 2024
This is a report concerning a lease for council’s consideration associated with Tenancy 2B10 within Tulmur Walk at 8 Nicholas Street, Nicholas Street Precinct.
A. That Council enter into a Lease (and any ancillary documentation) with the proposed lessee of the Tenancy 2B10, Tulmur Walk Building, 8 Nicholas Street (impacting part of Lot 1 RP157021) (“Tenancy 2B10”) within the Nicholas Street Precinct (under the commercial terms detailed in the confidential report and attachments by the Project Manager dated 16 January 2024).
B. That Council note, that in relation to Council’s disposal of its leasehold interest in the Tenancy 2B10 to the proposed lessee, that the Ministerial exemption under s236 1(f) of the Local Government Regulation 2012 applies to the disposal of Council’s interest in Tenancy 2B10 (Ministerial exemption contained in Attachment 1 of this report).
C. That pursuant to Section 257(1)(b) of the Local Government Act 2009, Council resolve to delegate to the Chief Executive Officer the power to take “contractual action” pursuant to section 238 of the Regulation, in order to implement Council’s decision at Recommendation A.
D. That Council be kept informed as to the progress and outcome of the execution and publication of details.
RELATED PARTIES
Colliers - Retail Leasing Agent
Knight Frank Valuation & Advisory Queensland – Independent Market Appraisal
Councillor Fechner may have a potential conflict of interest in relation to this matter
Councillor Madsen may have a potential conflict of interest in relation to this matter
ifuture Theme
Vibrant and Growing
Purpose of Report/Background
In 2019 council was granted a ministerial exemption (to 30 June 2023) under section 236 (1)(f) of the Local Government Regulation 2012 (Regulation) for the disposal of valuable non-current assets (leases and sub-leases) associated with the Nicholas Street Precinct redevelopment. The exemption allows council to efficiently and effectively implement its retail strategy through the disposal of leases and State sub-leases (held by council) by more appropriate, market accepted, transactional means other than by a tender or auction process mandated under section 227 of the Regulation. Due to the expiry of the initial exemption and to ensure council has sufficient time to fully implement its retail strategy, on 18 May 2023 a new Ministerial Exemption was granted (end date of 30 June 2028).
This exemption is required as retail and commercial leasing is generally not undertaken through a tender or auction process. It is a specialised process undertaken by experienced leasing firms with relationships with the types of tenants targeted for a project. These relationships allow conversations to explain a project and the opportunities tailored to each prospective tenant. The retail and commercial leasing agents appointed by council, have and continue to actively market the subject tenancies to prospective tenants.
Further, industry advice confirmed it would be highly likely that any tender or auction process for the retail and commercial tenancies would receive very limited responses and that any response would not contain the commercial terms sought by council. In addition, these processes would be inherently incapable of creating the desired mix and style of lessee council is seeking for its food and beverage, service and entertainment/leisure tenancies.
Correspondence from the Deputy Premier, Minister for State Development, Infrastructure, Local Government and Planning dated 18 May 2023 (refer Attachment 1) confirmed approval of a new exemption for both retail and commercial leasing. The exemption conditions council to adhere to the sound contracting principles detailed in section 104(3) of the Local Government Act 2009, specifically through a number of safeguards to ensure openness and transparency with regard to the related transactions.
The conditions require that each lease/sublease be approved by the Ipswich Central Redevelopment Committee and then full council prior to its execution. This process is to be replicated for each retail and commercial lease and sub-lease arrangement.
This paper is seeking council’s approval to enter into a lease for a retail tenancy associated with the Nicholas Street Precinct redevelopment utilising the process detailed above. The lease arrangement relates to Tenancy 2B10 on the Ground Level of Tulmur Walk, 8 Nicholas Street (approx. 58m2). Council holds the leasehold interest from Queensland Rail (Lease No. 601375840) over the Tulmur Walk building with the long-term lease expiring on 27 November 2077. The Tulmur Walk building impacts part of lot 1 RP157021 (over the rail line).
A lease is a contract by which one party conveys land, property, services, etc. to another for a specified term, and in this instance in return for a periodic payment. The lease agreement outlines all of the aspects of the lease arrangement so that each party understands their rights and obligations under the lease. An agreement for lease is necessary when the party owning the land is investing significant capital into refurbishing or building new space for the potential lessee. The agreement for lease pre-empts and contractually links to the final lease document whilst committing both parties to enter into a lease on occupation and/or opening of the space. Essentially an agreement for lease de-risks the landlord’s capital expenditure with a contracted outcome.
The Nicholas Street Precinct team will be negotiating up to 30 additional retail, food and beverage and leisure deals together with commercial floorspace offerings over the next few years. During this process and with the desire to drive the best financial outcome for council and its constituents, the precinct team need to protect this outcome by maintaining a competitive advantage during the negotiations, which can only happen with an element of confidentiality. The lessees will also seek and in most cases secure contractual obligations on both parties to maintain a level of confidentiality around commercially sensitive material. This is likely to be around key terms like rent, term, options to extend, landlord’ contributions, sales data access and general operational costs of the tenancy.
The brand names or companies associated with each executed agreement for lease or lease will be released prior to the tenant’s opening with the precinct team’s desire being to drive marketing reach across relating real estate and retail and commercial industry media channels to best serve the leasing uptake. As a result, the lessee’s details and agreed commercial terms to be reflected in the lease documentation are Commercial in Confidence. A memorandum of advice detailing the Commercial in Confidence nature of the content of this report is attached (refer confidential Attachment 2). Specific details on the lessee, the commercial terms and proposed tenure length are contained in confidential Attachments 3 - 6).
Council engaged Knight Frank Valuation & Advisory Queensland to provide an independent market appraisal of each proposed lease arrangement’s commercial terms as detailed in a Heads of Agreement (a precursor to an agreement for lease/lease detailing agreed commercial terms between the parties). This advice is considered by council prior to the Chief Executive Officer endorsing any Heads of Agreement progressing to the preparation of related legal documentation including agreements for lease, leases and ancillary documentation. Knight Frank’s review of the commercial terms for the Level 1 Eats tenancy is attached (refer confidential Attachment 4). Also attached is the Lease Deal Approval Report for the subject tenancy (refer confidential Attachment 5). Confidential Attachment 3 discusses the commercial terms and details any material changes from the Knight Frank’ review to the preparation of the lease. Confidential Attachment 6 identifies key financial outcomes from an asset valuation model (Forbury real estate software) utilising the subject deal’s terms and conditions.
This paper seeks approval for council to enter into a lease for a retail tenancy associated with the Nicholas Street Precinct redevelopment. The delegation to the Chief Executive Officer will enable council’s execution of the lease and any ancillary documentation for Tenancy 2B10 of Tulmur Walk building at 8 Nicholas Street and ensure the lessee can commence their fit-out works and open as soon as possible.
Post the execution of the lease documentation for each tenancy, council will be provided with a subsequent report detailing lessee specifics and their offering.
Legal/Policy Basis
This report and its recommendations are consistent with the following legislative provisions:
Local Government Act 2009
Local Government Regulation 2012
RISK MANAGEMENT IMPLICATIONS
HUMAN RIGHTS IMPLICATIONS
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HUMAN RIGHTS IMPACTS |
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OTHER DECISION |
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(a) What is the Act/Decision being made? |
Recommendation A relates to Council entering into a lease (and any ancillary documentation) for the retail Tenancy 2B10 of Tulmur Walk at 8 Nicholas Street.
Recommendation B outlines how Council will apply a ministerial exemption to the disposal of a leasehold interest in the Tulmur Walk building at 8 Nicholas Street.
Recommendation C delegates to the CEO the power to execute related lease documentation.
Recommendation D relates to the provision of an update to council.
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(b) What human rights are affected? |
No human rights are affected by this decision. This is because the prospective lessee is a company (only individuals have human rights). |
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(c) How are the human rights limited? |
Not applicable. |
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(d) Is there a good reason for limiting the relevant rights? Is the limitation fair and reasonable? |
Not applicable. |
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(e) Conclusion |
The decision is consistent with human rights. |
Financial/RESOURCE IMPLICATIONS
The precinct’s short to medium term commercial success remains dependent on identifying, attracting and securing a commercially viable tenancy mix through executed leases and sub-leases. Funding for the retail and commercial leasing agent’s payments and any associated landlord contributions is incorporated into the project’s budget.
COMMUNITY and OTHER CONSULTATION
The contents of this report did not require any community consultation.
Detailed consultation has occurred with the Department of State Development, Infrastructure, Local Government and Planning on the both the conditioned process and the associated documentation to be provided to council for AFL/lease approvals.
Council’s Legal Services team have previously been consulted on the form and contents of leasing reports and their attachments.
Conclusion
The flexibility provided by the ministerial exemption over the Regulation’s tender and auction provisions allows council to optimise the tenancy mix, the commercial outcomes and the long-term success for each tenancy and the project overall.
As a priority, the focus is to progress the conversion of endorsed Heads of Agreement into agreement for leases and leases particularly due to the completion of refurbishment works on both the Eats and Tulmur Walk buildings and the progress of construction works on both the Venue building and the Commonwealth Hotel.
Approval of this retail lease for Tenancy 2B10 of Tulmur Walk building at 8 Nicholas Street will continue the positive message to the Ipswich community and the market that the redevelopment is moving forward.
Attachments and Confidential Background Papers
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1. |
Ministerial Exemption Approval 18.5.23 ⇩ |
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CONFIDENTIAL |
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2. |
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3. |
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4. |
Knight Frank Assessment - 2B10 Tulmur Walk 8 Nicholas Street |
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5. |
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6. |
Greg Thomas
Project Manager
I concur with the recommendations contained in this report.
Sonia Cooper
Chief Executive Officer
“Together, we proudly enhance the quality of life for our community”
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Ipswich Central Redevelopment Committee Special Meeting Agenda |
23 January 2024 |
ITEM: 2
SUBJECT: Nicholas Street Precinct - Approval of an Agreement for Lease for Tenancy MM1 Venue (37 Nicholas Street)
AUTHOR: Project Manager
DATE: 16 January 2024
This is a report concerning an Agreement for Lease for council’s consideration associated with Tenancy MM1 on the ground level of the Venue building at 37 Nicholas Street, Nicholas Street Precinct.
A. That Council enter into an Agreement for Lease and associated documentation of the Agreement for Lease with the proposed lessee for Tenancy MM1 in the Venue Building (impacting part of Lot 1 on RP209886) (“Tenancy MM1”) within the Nicholas Street Precinct (under the commercial terms detailed in the confidential report and attachments by the Project Manager dated 16 January 2024).
B. That conditional upon Council satisfactorily executing the Agreement to Lease with the proposed lessee, (contained in recommendation A of this report), Council enter into a lease for Tenancy MM1 with the proposed lessee (as detailed in the confidential report and attachments by the Project Manager dated 16 January 2024).
C. That Council note, that in relation to Council’s disposal of its leasehold interest in Tenancy MM1 to the proposed lessee, that the Ministerial exemption under s236 1(f) of the Local Government Regulation 2012 applies to the disposal of Council’s interest in Tenancy MM1 (Ministerial exemption contained in Attachment 1 of this report).
D. That pursuant to Section 257(1)(b) of the Local Government Act 2009, Council resolve to delegate to the Chief Executive Officer the power to take “contractual action” pursuant to section 238 of the Regulation, in order to implement Council’s decision at Recommendations A and B.
E. That Council be kept informed as to the progress and outcome of the execution and publication of details.
RELATED PARTIES
Colliers Property Services - Retail Leasing Agent
Knight Frank Valuation & Advisory Queensland – Independent Market Appraisal
Councillor Fechner may have a potential conflict of interest in relation to this matter
Councillor Madsen may have a potential conflict of interest in relation to this matter
ifuture Theme
Vibrant and Growing
Purpose of Report/Background
In 2019 council was granted a ministerial exemption (to 30 June 2023) under section 236 (1)(f) of the Local Government Regulation 2012 (Regulation) for the disposal of valuable non-current assets (leases and sub-leases) associated with the Nicholas Street Precinct’ redevelopment. The exemption allows council to efficiently and effectively implement its retail strategy through the disposal of leases and State sub-leases (held by council) by more appropriate, market accepted, transactional means other than by a tender or auction process mandated under section 227 of the Regulation. Due to the expiry of the initial exemption and to ensure council has sufficient time to fully implement its retail strategy, on 18 May 2023 a new Ministerial Exemption was granted (end date of 30 June 2028).
This exemption is required as retail and commercial leasing is generally not undertaken through a tender or auction process. It is a specialised process undertaken by experienced leasing firms with relationships with the types of tenants targeted for a project. These relationships allow conversations to explain a project and the opportunities tailored to each prospective tenant. The retail and commercial leasing agents appointed by council, have and continue to actively market the subject tenancies to prospective tenants.
Further, industry advice confirmed it would be highly likely that any tender or auction process for the retail and commercial tenancies would receive very limited responses and that any response would not contain the commercial terms sought by council. In addition, these processes would be inherently incapable of creating the desired mix and style of lessee council is seeking for its food and beverage, service and entertainment/leisure tenancies.
Correspondence from the Deputy Premier, Minister for State Development, Infrastructure, Local Government and Planning dated 18 May 2023 (refer Attachment 1) confirmed approval of a new exemption for both retail and commercial leasing. The exemption conditions council to adhere to the sound contracting principles detailed in section 104(3) of the Local Government Act 2009, specifically through a number of safeguards to ensure openness and transparency with regard to the related transactions.
The conditions require that each lease/sublease be approved by the Ipswich Central Redevelopment Committee and then full council prior to its execution. This process is to be replicated for each retail and commercial lease and sub-lease arrangement.
This paper is seeking council’s approval to enter into an agreement for lease for a retail tenancy associated with the Nicholas Street Precinct redevelopment utilising the process detailed above. The lease arrangement relates to Tenancy MM1 on the Ground Level of the Venue building at 37 Nicholas Street (approx. 2737 m2) and the retail tenant will be a mini major tenant. Council holds the Venue building in freehold (Lot 1 RP 209886). It is noted here that MM1 will from now forwards include the leasing area previously assigned as MM1 and MM3. The two areas are to be combined for this lease.
A lease is a contract by which one party conveys land, property, services, etc. to another for a specified term, and in this instance in return for a periodic payment. The lease agreement outlines all of the aspects of the lease arrangement so that each party understands their rights and obligations under the lease. An agreement for lease is necessary when the party owning the land is investing significant capital into refurbishing or building new space for the potential lessee. The agreement for lease pre-empts and contractually links to the final lease document whilst committing both parties to enter into a lease on occupation and/or opening of the space. Essentially an agreement for lease de-risks the landlord’s capital expenditure with a contracted outcome.
The Nicholas Street Precinct team will be negotiating up to 30 additional retail, food and beverage and leisure deals together with commercial floorspace offerings over the next few years. During this process and with the desire to drive the best financial outcome for council and its constituents, the precinct team need to protect this outcome by maintaining a competitive advantage during the negotiations, which can only happen with an element of confidentiality. The lessees will also seek and in most cases secure contractual obligations on both parties to maintain a level of confidentiality around commercially sensitive material. This is likely to be around key terms like rent, term, options to extend, landlord’ contributions, sales data access and general operational costs of the tenancy.
The brand names or companies associated with each executed agreement for lease or lease will be released prior to the tenant’s opening with the precinct team’s desire being to drive marketing reach across relating real estate and retail and commercial industry media channels to best serve the leasing uptake. As a result, the lessee’s details and agreed commercial terms to be reflected in the lease documentation are Commercial in Confidence. A memorandum of advice detailing the Commercial in Confidence nature of the content of this report is attached (refer confidential Attachment 2). Specific details on the lessee, the commercial terms and proposed tenure length are contained in confidential Attachments 3 - 6).
Council engaged Knight Frank Valuation & Advisory Queensland to provide an independent market appraisal of each proposed lease arrangement’s commercial terms as detailed in a Heads of Agreement (a precursor to an agreement for lease/lease detailing agreed commercial terms between the parties). This advice is considered by council prior to the Chief Executive Officer endorsing any Heads of Agreement progressing to the preparation of related legal documentation including agreements for lease, leases and ancillary documentation. Knight Frank’s review of the commercial terms for the Level 1 Eats tenancy is attached (refer confidential Attachment 4). Also attached is the Lease Deal Approval Report for the subject tenancy (refer confidential Attachment 5). Confidential Attachment 3 discusses the commercial terms and details any material changes from the Knight Frank’ review to the preparation of the lease. Confidential Attachment 6 identifies key financial outcomes from an asset valuation model (Forbury real estate software) utilising the subject deal’s terms and conditions.
This paper seeks approval for council to enter into an Agreement for Lease for a retail tenancy associated with the Nicholas Street Precinct redevelopment. The delegation to the Chief Executive Officer will enable council’s execution of the lease and any ancillary documentation for MM1 being on the Ground level of the Venue building at 37 Nicholas Street and ensure the lessee can commence their fit-out works and open as soon as possible.
Post the execution of the lease documentation for each tenancy, council will be provided with a subsequent report detailing lessee specifics and their offering.
Legal/Policy Basis
This report and its recommendations are consistent with the following legislative provisions:
Local Government Act 2009
Local Government Regulation 2012
RISK MANAGEMENT IMPLICATIONS
The medium to long-term success and viability of the retail and commercial precincts and the overall Ipswich Central CBD Redevelopment is heavily dependent on the leasing program delivering a tenancy mix comprising high-quality, commercially successful tenants. The approval and subsequent execution of additional leases will send positive signals to the retail and commercial leasing market around the precinct’s future success.
HUMAN RIGHTS IMPLICATIONS
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HUMAN RIGHTS IMPACTS |
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OTHER DECISION |
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(a) What is the Act/Decision being made? |
Recommendation A relates to Council entering into an agreement for lease and an associated documentation for Venue Tenancy MM1.
Recommendation B relates to Council entering into a lease for Venue Tenancy MM1.
Recommendation C outlines how Council will apply a ministerial exemption to the disposal of a leasehold interest in the Venue Building.
Recommendation D delegates to the CEO the power to execute related agreement for lease and lease documentation.
Recommendation E relates to the provision of an update to council.
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(b) What human rights are affected? |
No human rights are affected by this decision. This is because the prospective lessee is a company (only individuals have human rights). |
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(c) How are the human rights limited? |
Not applicable. |
|
(d) Is there a good reason for limiting the relevant rights? Is the limitation fair and reasonable? |
Not applicable. |
|
(e) Conclusion |
The decision is consistent with human rights. |
Financial/RESOURCE IMPLICATIONS
The precinct’s short to medium term commercial success remains dependent on identifying, attracting and securing a commercially viable tenancy mix through executed leases and sub-leases. Funding for the retail and commercial leasing agent’s payments and any associated landlord contributions is incorporated into the project’s budget.
COMMUNITY and OTHER CONSULTATION
The contents of this report did not require any community consultation.
Detailed consultation has occurred with the Department of State Development, Infrastructure, Local Government and Planning on the both the conditioned process and the associated documentation to be provided to council for AFL/lease approvals.
Council’s Legal Services team have previously been consulted on the form and contents of leasing reports and their attachments.
Conclusion
The flexibility provided by the ministerial exemption over the Regulation’s tender and auction provisions allows council to optimise the tenancy mix, the commercial outcomes and the long-term success for each tenancy and the project overall.
As a priority, the focus is to progress the conversion of endorsed Heads of Agreement into agreement for leases and leases particularly due to the completion of refurbishment works on both the Eats and Tulmur Walk buildings and the progress of construction works on both the Venue building and the Commonwealth Hotel.
Approval of this retail lease for MM1 of the Venue building at 37 Nicholas Street will continue the positive message to the Ipswich community and the market that the redevelopment is moving forward.
Attachments and Confidential Background Papers
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1. |
Ministerial Exemption Approval 18.5.23 ⇩ |
|
|
|
|
|
CONFIDENTIAL |
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2. |
|
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3. |
|
|
4. |
Knight Frank Assessment - Tenancy MM1 Venue 37 Nicholas Street |
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5. |
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6. |
Forbury Model Analysis - Tenancy MM1 Venue 37 Nicholas Street |
Greg Thomas
Project Manager
I concur with the recommendations contained in this report.
Sonia Cooper
Chief Executive Officer
“Together, we proudly enhance the quality of life for our community”
|
Ipswich Central Redevelopment Committee Special Meeting Agenda |
23 January 2024 |
ITEM: 3
SUBJECT: Nicholas Street Precinct - Approval of an Agreement for Lease for Tenancy T1 Venue (37 Nicholas Street)
AUTHOR: Project Manager
DATE: 16 January 2024
This is a report concerning an Agreement for Lease for council’s consideration associated with Tenancy T1 in the ground level of the Venue building at 37 Nicholas Street, Nicholas Street Precinct.
A. That Council enter into an Agreement for Lease and associated documentation of the Agreement for Lease with the proposed lessee for Tenancy T1 in the Venue Building (impacting part of Lot 1 on RP209886) (“Tenancy T1”) within the Nicholas Street Precinct (under the commercial terms detailed in the confidential report and attachments by the Project Manager dated 16 January 2024).
B. That conditional upon Council satisfactorily executing the Agreement to Lease with the proposed lessee, (contained in recommendation A of this report), Council enter into a lease for Tenancy T1 with the proposed lessee (as detailed in the confidential report and attachments by the Project Manager dated 16 January 2024).
C. That Council note, that in relation to Council’s disposal of its leasehold interest in the Level 1 Tenancy to the proposed lessee, that the Ministerial exemption under s236 (f) of the Local Government Regulation 2012 applies to the disposal of Council’s interest in the Level 1 Tenancy (Ministerial exemption contained in Attachment 1 of this report).
D. That pursuant to Section 257(1)(b) of the Local Government Act 2009, Council resolve to delegate to the Chief Executive Officer the power to take “contractual action” pursuant to section 238 of the Regulation, in order to implement Council’s decision at Recommendation A.
E. That Council be kept informed as to the progress and outcome of the execution and publication of details.
RELATED PARTIES
Colliers - Retail Leasing Agent
Knight Frank Valuation & Advisory Queensland – Independent Market Appraisal
Councillor Fechner may have a potential conflict of interest in relation to this matter
Councillor Madsen may have a potential conflict of interest in relation to this matter
ifuture Theme
Vibrant and Growing
Purpose of Report/Background
In 2019 council was granted a ministerial exemption (to 30 June 2023) under section 236 (1)(f) of the Local Government Regulation 2012 (Regulation) for the disposal of valuable non-current assets (leases and sub-leases) associated with the Nicholas Street Precinct’ redevelopment. The exemption allows council to efficiently and effectively implement its retail strategy through the disposal of leases and State sub-leases (held by council) by more appropriate, market accepted, transactional means other than by a tender or auction process mandated under section 227 of the Regulation. Due to the expiry of the initial exemption and to ensure council has sufficient time to fully implement its retail strategy, on 18 May 2023 a new Ministerial Exemption was granted (end date of 30 June 2028).
This exemption is required as retail and commercial leasing is generally not undertaken through a tender or auction process. It is a specialised process undertaken by experienced leasing firms with relationships with the types of tenants targeted for a project. These relationships allow conversations to explain a project and the opportunities tailored to each prospective tenant. The retail and commercial leasing agents appointed by council, have and continue to actively market the subject tenancies to prospective tenants.
Further, industry advice confirmed it would be highly likely that any tender or auction process for the retail and commercial tenancies would receive very limited responses and that any response would not contain the commercial terms sought by council. In addition, these processes would be inherently incapable of creating the desired mix and style of lessee council is seeking for its food and beverage, service and entertainment/leisure tenancies.
Correspondence from the Deputy Premier, Minister for State Development, Infrastructure, Local Government and Planning dated 18 May 2023 (refer Attachment 1) confirmed approval of a new exemption for both retail and commercial leasing. The exemption conditions council to adhere to the sound contracting principles detailed in section 104(3) of the Local Government Act 2009, specifically through a number of safeguards to ensure openness and transparency with regard to the related transactions.
The conditions require that each lease/sublease be approved by the Ipswich Central Redevelopment Committee and then full council prior to its execution. This process is to be replicated for each retail and commercial lease and sub-lease arrangement.
This paper is seeking council’s approval to enter into an agreement for lease for a retail tenancy associated with the Nicholas Street Precinct redevelopment utilising the process detailed above. The lease arrangement relates to Tenancy T1 on the Ground Level of the Venue building at 37 Nicholas Street (approx. 193 m2). Council holds the Venue building in freehold (Lot 1 RP 209886).
A lease is a contract by which one party conveys land, property, services, etc. to another for a specified term, and in this instance in return for a periodic payment. The lease agreement outlines all of the aspects of the lease arrangement so that each party understands their rights and obligations under the lease. An agreement for lease is necessary when the party owning the land is investing significant capital into refurbishing or building new space for the potential lessee. The agreement for lease pre-empts and contractually links to the final lease document whilst committing both parties to enter into a lease on occupation and/or opening of the space. Essentially an agreement for lease de-risks the landlord’s capital expenditure with a contracted outcome.
The Nicholas Street Precinct team will be negotiating up to 30 additional retail, food and beverage and leisure deals together with commercial floorspace offerings over the next few years. During this process and with the desire to drive the best financial outcome for council and its constituents, the precinct team need to protect this outcome by maintaining a competitive advantage during the negotiations, which can only happen with an element of confidentiality. The lessees will also seek and in most cases secure contractual obligations on both parties to maintain a level of confidentiality around commercially sensitive material. This is likely to be around key terms like rent, term, options to extend, landlord’ contributions, sales data access and general operational costs of the tenancy.
The brand names or companies associated with each executed agreement for lease or lease will be released prior to the tenant’s opening with the precinct team’s desire being to drive marketing reach across relating real estate and retail and commercial industry media channels to best serve the leasing uptake. As a result, the lessee’s details and agreed commercial terms to be reflected in the lease documentation are Commercial in Confidence. A memorandum of advice detailing the Commercial in Confidence nature of the content of this report is attached (refer confidential Attachment 2). Specific details on the lessee, the commercial terms and proposed tenure length are contained in confidential Attachments 3 - 6).
Council engaged Knight Frank Valuation & Advisory Queensland to provide an independent market appraisal of each proposed lease arrangement’s commercial terms as detailed in a Heads of Agreement (a precursor to an agreement for lease/lease detailing agreed commercial terms between the parties). This advice is considered by council prior to the Chief Executive Officer endorsing any Heads of Agreement progressing to the preparation of related legal documentation including agreements for lease, leases and ancillary documentation. Knight Frank’s review of the commercial terms for the Level 1 Eats tenancy is attached (refer confidential Attachment 4). Also attached is the Lease Deal Approval Report for the subject tenancy (refer confidential Attachment 5). Confidential Attachment 3 discusses the commercial terms and details any material changes from the Knight Frank’ review to the preparation of the lease. Confidential Attachment 6 identifies key financial outcomes from an asset valuation model (Forbury real estate software) utilising the subject deal’s terms and conditions.
This paper seeks approval for council to enter into an Agreement for Lease for a retail tenancy associated with the Nicholas Street Precinct redevelopment. The delegation to the Chief Executive Officer will enable council’s execution of the agreement for lease and any ancillary documentation for Tenancy T1 within the Venue building at 37 Nicholas Street and ensure the lessee can commence their fit-out works and open as soon as possible.
Post the execution of the lease documentation for each tenancy, council will be provided with a subsequent report detailing lessee specifics and their offering.
Legal/Policy Basis
This report and its recommendations are consistent with the following legislative provisions:
Local Government Act 2009
Local Government Regulation 2012
RISK MANAGEMENT IMPLICATIONS
The medium to long-term success and viability of the retail and commercial precincts and the overall Ipswich Central CBD Redevelopment is heavily dependent on the leasing program delivering a tenancy mix comprising high-quality, commercially successful tenants. The approval and subsequent execution of additional leases will send positive signals to the retail and commercial leasing market around the precinct’s future success.
HUMAN RIGHTS IMPLICATIONS
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HUMAN RIGHTS IMPACTS |
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OTHER DECISION |
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(a) What is the Act/Decision being made? |
Recommendation A relates to Council entering into an agreement for lease and an associated documentation for Venue Tenancy T1.
Recommendation B relates to Council entering into a lease for Venue Tenancy T1.
Recommendation C outlines how Council will apply a ministerial exemption to the disposal of a leasehold interest in the Venue Building.
Recommendation D delegates to the CEO the power to execute related agreement for lease and lease documentation.
Recommendation E relates to the provision of an update to council.
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(b) What human rights are affected? |
No human rights are affected by this decision. This is because the prospective lessee is a company (only individuals have human rights). |
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(c) How are the human rights limited? |
Not applicable. |
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(d) Is there a good reason for limiting the relevant rights? Is the limitation fair and reasonable? |
Not applicable. |
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(e) Conclusion |
The decision is consistent with human rights. |
Financial/RESOURCE IMPLICATIONS
The precinct’s short to medium term commercial success remains dependent on identifying, attracting and securing a commercially viable tenancy mix through executed leases and sub-leases. Funding for the retail and commercial leasing agent’s payments and any associated landlord contributions is incorporated into the project’s budget.
COMMUNITY and OTHER CONSULTATION
The contents of this report did not require any community consultation.
Detailed consultation has occurred with the Department of State Development, Infrastructure, Local Government and Planning on the both the conditioned process and the associated documentation to be provided to council for AFL/lease approvals.
Council’s Legal Services team have previously been consulted on the form and contents of leasing reports and their attachments.
Conclusion
The flexibility provided by the ministerial exemption over the Regulation’s tender and auction provisions allows council to optimise the tenancy mix, the commercial outcomes and the long-term success for each tenancy and the project overall.
As a priority, the focus is to progress the conversion of endorsed Heads of Agreement into agreement for leases and leases particularly due to the completion of refurbishment works on both the Eats and Tulmur Walk buildings and the progress of construction works on both the Venue building and the Commonwealth Hotel.
Approval of this retail lease for Tenancy T1 of the Venue building at 37 Nicholas Street will continue the positive message to the Ipswich community and the market that the redevelopment is moving forward.
Attachments and Confidential Background Papers
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1. |
Ministerial Exemption Approval 18.5.23 ⇩ |
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CONFIDENTIAL |
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2. |
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3. |
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4. |
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5. |
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6. |
Greg Thomas
Project Manager
I concur with the recommendations contained in this report.
Sonia Cooper
Chief Executive Officer
“Together, we proudly enhance the quality of life for our community”
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Ipswich Central Redevelopment Committee Special Meeting Agenda |
23 January 2024 |
Doc ID No: A9737582
ITEM: 4
SUBJECT: Nicholas Street Precinct - Approval of an Agreement for Lease within the Nicholas Street Car Park (11 Nicholas Street)
AUTHOR: Project Manager
DATE: 16 January 2024
This is a report concerning an Agreement for Lease for council’s consideration located within the Nicholas Street Car Park, 11 Nicholas Street, Nicholas Street Precinct.
A. That Council enter into an Agreement for Lease and associated documentation of the Agreement for Lease with the proposed lessee for Tenancy CW (12-16 car parks) within the Nicholas Street Car Park (impacting part of Lot 1 on RP307972) (“Tenancy CW”) within the Nicholas Street Precinct (under the commercial terms detailed in the confidential report and attachments by the Project Manager dated 16 January 2024).
B. That conditional upon Council satisfactorily executing the Agreement to Lease with the proposed lessee, (contained in recommendation A of this report), Council enter into a lease for Tenancy CW with the proposed lessee (as detailed in the confidential report and attachments by the Project Manager dated 16 January 2024).
C. That Council note, that in relation to Council’s disposal of its leasehold interest in the Nicholas Street Car Park to the proposed lessee, that the Ministerial exemption under s236 (f) of the Local Government Regulation 2012 applies to the disposal of Council’s interest in Tenancy CW (Ministerial exemption contained in Attachment 1 of this report).
D. That pursuant to Section 257(1)(b) of the Local Government Act 2009, Council resolve to delegate to the Chief Executive Officer the power to take “contractual action” pursuant to section 238 of the Regulation, in order to implement Council’s decision at Recommendation A.
E. That Council be kept informed as to the progress and outcome of the execution and publication of details.
RELATED PARTIES
Colliers - Retail Leasing Agent
Knight Frank Valuation & Advisory Queensland – Independent Market Appraisal
Councillor Fechner may have a potential conflict of interest in relation to this matter
Councillor Madsen may have a potential conflict of interest in relation to this matter
ifuture Theme
Vibrant and Growing
Purpose of Report/Background
In 2019 council was granted a ministerial exemption (to 30 June 2023) under section 236 (1)(f) of the Local Government Regulation 2012 (Regulation) for the disposal of valuable non-current assets (leases and sub-leases) associated with the Nicholas Street Precinct’ redevelopment. The exemption allows council to efficiently and effectively implement its retail strategy through the disposal of leases and State sub-leases (held by council) by more appropriate, market accepted, transactional means other than by a tender or auction process mandated under section 227 of the Regulation. Due to the expiry of the initial exemption and to ensure council has sufficient time to fully implement its retail strategy, on 18 May 2023 a new Ministerial Exemption was granted (end date of 30 June 2028).
This exemption is required as retail and commercial leasing is generally not undertaken through a tender or auction process. It is a specialised process undertaken by experienced leasing firms with relationships with the types of tenants targeted for a project. These relationships allow conversations to explain a project and the opportunities tailored to each prospective tenant. The retail and commercial leasing agents appointed by council, have and continue to actively market the subject tenancies to prospective tenants.
Further, industry advice confirmed it would be highly likely that any tender or auction process for the retail and commercial tenancies would receive very limited responses and that any response would not contain the commercial terms sought by council. In addition, these processes would be inherently incapable of creating the desired mix and style of lessee council is seeking for its food and beverage, service and entertainment/leisure tenancies.
Correspondence from the Deputy Premier, Minister for State Development, Infrastructure, Local Government and Planning dated 18 May 2023 (refer Attachment 1) confirmed approval of a new exemption for both retail and commercial leasing. The exemption conditions council to adhere to the sound contracting principles detailed in section 104(3) of the Local Government Act 2009, specifically through a number of safeguards to ensure openness and transparency with regard to the related transactions.
The conditions require that each lease/sublease be approved by the Ipswich Central Redevelopment Committee and then full council prior to its execution. This process is to be replicated for each retail and commercial lease and sub-lease arrangement.
This paper is seeking council’s approval to enter into a lease for a commercial tenancy associated with the Nicholas Street Precinct redevelopment utilising the process detailed above. The agreement for lease arrangement relates to part of the Nicholas Street Car Park (approx. 12-19 car parks). The Nicholas Street Car Park sits immediately below Tulmur Place. Council holds the freehold interest in this land (Lot 1 SP307972).
A lease is a contract by which one party conveys land, property, services, etc. to another for a specified term, and in this instance in return for a periodic payment. The lease agreement outlines all of the aspects of the lease arrangement so that each party understands their rights and obligations under the lease. An agreement for lease is necessary when the party owning the land is investing significant capital into refurbishing or building new space for the potential lessee. The agreement for lease pre-empts and contractually links to the final lease document whilst committing both parties to enter into a lease on occupation and/or opening of the space. Essentially an agreement for lease de-risks the landlord’s capital expenditure with a contracted outcome.
The Nicholas Street Precinct team will be negotiating up to 30 additional retail, food and beverage and leisure deals together with commercial floorspace offerings over the next few years. During this process and with the desire to drive the best financial outcome for council and its constituents, the precinct team need to protect this outcome by maintaining a competitive advantage during the negotiations, which can only happen with an element of confidentiality. The lessees will also seek and in most cases secure contractual obligations on both parties to maintain a level of confidentiality around commercially sensitive material. This is likely to be around key terms like rent, term, options to extend, landlord’ contributions, sales data access and general operational costs of the tenancy.
The brand names or companies associated with each executed agreement for lease or lease will be released prior to the tenant’s opening with the precinct team’s desire being to drive marketing reach across relating real estate and retail and commercial industry media channels to best serve the leasing uptake. As a result, the lessee’s details and agreed commercial terms to be reflected in the lease documentation are Commercial in Confidence. A memorandum of advice detailing the Commercial in Confidence nature of the content of this report is attached (refer confidential Attachment 2). Specific details on the lessee, the commercial terms and proposed tenure length are contained in confidential Attachments 3 - 6).
Council engaged Knight Frank Valuation & Advisory Queensland to provide an independent market appraisal of each proposed lease arrangement’s commercial terms as detailed in a Heads of Agreement (a precursor to an agreement for lease/lease detailing agreed commercial terms between the parties). This advice is considered by council prior to the Chief Executive Officer endorsing any Heads of Agreement progressing to the preparation of related legal documentation including agreements for lease, leases and ancillary documentation. Knight Frank’s review of the commercial terms for the Level 1 Eats tenancy is attached (refer confidential Attachment 4). Also attached is the Lease Deal Approval Report for the subject tenancy (refer confidential Attachment 5). Confidential Attachment 3 discusses the commercial terms and details any material changes from the Knight Frank’ review to the preparation of the lease. It should be noted that the Forbury real estate software (utilised for all other deal assessments) does not have the capability to assess this deal as the car park was outside of the scope used to establish the related valuation model. Given this, the NSP team undertook a detailed financial analysis and feasibility assessment to determine the return on investment from the proposed tenancy (refer confidential Attachment 6).
This paper seeks approval for council to enter into an agreement for lease for a commercial tenancy within the Nicholas Street Car Park. The delegation to the Chief Executive Officer will enable council’s execution of the agreement for lease and any associated documentation for the proposed Tenancy CW within the Nicholas Street Car Park and ensure the lessee can commence their fit-out works and open as soon as possible.
Post the execution of the lease documentation for each tenancy, council will be provided with a subsequent report detailing lessee specifics and their offering.
Legal/Policy Basis
This report and its recommendations are consistent with the following legislative provisions:
Local Government Act 2009
Local Government Regulation 2012
RISK MANAGEMENT IMPLICATIONS
The medium to long-term success and viability of the retail and commercial precincts and the overall Ipswich Central CBD Redevelopment is heavily dependent on the leasing program delivering a tenancy mix comprising high-quality, commercially successful tenants. The approval and subsequent execution of additional leases will send positive signals to the retail and commercial leasing market around the precinct’s future success.
HUMAN RIGHTS IMPLICATIONS
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HUMAN RIGHTS IMPACTS |
|
|
OTHER DECISION |
|
|
|
|
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(a) What is the Act/Decision being made? |
Recommendation A relates to Council entering into an agreement for lease and an associated documentation for Nicholas Street Car Park Tenancy CW.
Recommendation B relates to Council entering into a lease for Nicholas Street Car Park Tenancy CW.
Recommendation C outlines how Council will apply a ministerial exemption to the disposal of a leasehold interest in the Nicholas Street Car Park Tenancy CW.
Recommendation D delegates to the CEO the power to execute related agreement for lease and lease documentation.
Recommendation E relates to the provision of an update to council.
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(b) What human rights are affected? |
No human rights are affected by this decision. This is because the prospective lessee is a company (only individuals have human rights). |
|
(c) How are the human rights limited? |
Not applicable. |
|
(d) Is there a good reason for limiting the relevant rights? Is the limitation fair and reasonable? |
Not applicable. |
|
(e) Conclusion |
The decision is consistent with human rights. |
Financial/RESOURCE IMPLICATIONS
The precinct’s short to medium term commercial success remains dependent on identifying, attracting and securing a commercially viable tenancy mix through executed leases and sub-leases. Funding for the retail and commercial leasing agent’s payments and any associated landlord contributions is incorporated into the project’s budget.
COMMUNITY and OTHER CONSULTATION
The contents of this report did not require any community consultation.
Detailed consultation has occurred with the Department of State Development, Infrastructure, Local Government and Planning on the both the conditioned process and the associated documentation to be provided to council for AFL/lease approvals.
Council’s Legal Services team have previously been consulted on the form and contents of leasing reports and their attachments.
Conclusion
The flexibility provided by the ministerial exemption over the Regulation’s tender and auction provisions allows council to optimise the tenancy mix, the commercial outcomes and the long-term success for each tenancy and the project overall.
As a priority, the focus is to progress the conversion of endorsed Heads of Agreement into agreement for leases and leases particularly due to the completion of refurbishment works on both the Eats and Tulmur Walk buildings and the progress of construction works on both the Venue building and the Commonwealth Hotel.
Approval of this commercial lease Tenancy CW within the Nicolas Street Car Park at 11 Nicholas Street will continue the positive message to the Ipswich community and the market that the redevelopment is moving forward.
Attachments and Confidential Background Papers
|
1. |
Ministerial Exemption Approval 18.5.23 ⇩ |
|
|
|
|
|
CONFIDENTIAL |
|
2. |
|
|
3. |
|
|
4. |
|
|
5. |
|
|
6. |
Greg Thomas
Project Manager
I concur with the recommendations contained in this report.
Sonia Cooper
Chief Executive Officer
“Together, we proudly enhance the quality of life for our community”
