Boxpark’s £3m loan under threat if summer opening is delayed

It’s not just the trains which are running late at East Croydon. So is the planned opening date for Boxpark.

Boxpark is on its way to Croydon, thanks to a £3m council loan. And now a senior member of council staff is working for Boxpark

Will Boxpark open on time?

Croydon was chosen to be the second location of the retail mall made from shipping containers, following the original Boxpark at Shoreditch. At first, it was to open for business on the Ruskin Square site alongside East Croydon Station in “early 2016”. Then it was announced that it was to be only for food and drink outlets, and none of the hipster fashion stores which had made the original Boxpark so attractive. And then in mid-2015 it emerged that it would be opening “next summer”.

But now sources within the construction industry suggest that unless south London gets to enjoy an “Indian Summer” in September or October, then that promised opening date will be missed.

And that could have important financial ramifications for Croydon Council, who generously agreed to loan £3 million of public money to Boxpark.

According to a council email released to Inside Croydon under the provisions of the Freedom of Information Act, “Boxpark have until 31st March 2016 to start on site and 12 months from the start date to open development; this is still on course to achieve target date of summer 16”. That was last April.

That email was from Matthew McMillan, at the time the head of the council’s “inward investment” team, and was sent to Jo Negrini, the increasingly powerful executive director overseeing the town centre’s redevelopment.

Croydon Council leader Tony Newman in discussion with Boxpark's Roger wade last night: "So, after that £3m loan from the council, is there a discount on burgers on our way back from watching Fulham?"

Croydon Council leader Tony Newman in discussion with Boxpark’s Roger Wade at last year’s party to “celebrate” the public cash being paid over

The council has withheld other documents which might have added some clarity to McMillan’s email, specifically in terms of the 12-month deadline for the development to open. But if there is, as reports from the site suggest, some delay in Boxpark being ready to open this summer, it could be that a significant break clause in the £3million five-year council loan may be triggered. Alternatively, Boxpark could find itself having to make loan repayments before receiving income from the site. Or Croydon Council Tax-payers could be left out-of-pocket.

According to a council report proposing the scheme, as well as going into the investment capital business, Croydon Council is also going into the pop-up shop trade by taking eight of the 80 premises planned in Boxpark during its lifetime; it is expected by 2021 to make way for other, more permanent developments planned for the Ruskin Square site by its owners, Stanhope Schroders (who are trading as Croydon Gateway for this scheme).

The council will be paying Boozepark £160,000 per year for the privilege of using the eight units, a significant subsidy.

The report also reveals that Boxpark is getting the site at a peppercorn rent, and that the Greater London Authority has stumped up as much as £500,000 for “pre-development work”. In addition, Croydon Council will “provide Boxpark with a grant of £61,500 per annum for five years”. But no where in the public documents does it state what this nice little earner is for.

So, in total, Roger Wade’s Croydon Boozepark appears to be getting a rent-free site alongside one of the busiest rail hubs in London, plus £1.6 million of public cash over five years, in addition to the £3million loan. Trebles all round!

The major reason given for providing such an attractive financial package for Boozepark was to attract more businesses to take up tenancies within Ruskin Square. In a report to council cabinet last April seeking approval for the financial deal, it said, “The current owners Croydon Gateway Limited Partnership (CGLP) have held the site for over 13 years, and whilst productive discussions with them has resulted in a great deal of positive activity over the past year and schemes progressing in the north of the site, it is anticipated that the southern end of the site will remain vacant in the medium to long term”.

The April 2015 council email, obtained under FoI, which shows that delays in Boozepark opening could jeopardise their council loan

The April 2015 council email, obtained under FoI, which shows that delays in Boozepark opening could jeopardise their council loan

Like the email, the council report was written by Matthew McMillan. Within six months, McMillan was a Boxpark employee.

Today, as well as the Vita housing being built opposite Platform 1 on East Croydon Station – the scheme referred to in the report as “progressing in the north of the site” – Ruskin Square is well advanced in building its first office block, which seems likely to be rented in full by the taxman, and last week got designated planning permission for a second office block, also to the southern end of the site.

McMillan’s report advocating the need for Boxpark laid it on with a trowel: “The Council… anticipate[s] this use will catalyse the comprehensive redevelopment of the site…

“One of key barriers cited by letting agents and developers is that Croydon does not have leisure facilities/quality of experience on street and at major arrival points, such as East Croydon, to attract new business occupier concerned with attracting a high quality workforce – a major barrier to attracting new tenants.

“This scheme will substantially address these concerns and support the comprehensive development of the site,” McMillan’s report states.

McMillan’s report also claimed that Boxpark will create between £7.3 million and £10.4million of added value to the Croydon economy, and estimated that Boxpark traders will pay around £170,000 per year in business rates to the council.

It also claimed that the development will create 240 jobs – but that only around half of these would go to Croydon residents.

Early indications suggest that there are few, if any, Croydon-based businesses will be taking space in Boxpark, whenever it opens. With such generous terms being provided by the council to lure Boozepark to a prime site, it is little wonder that existing Croydon traders are beginning to question why their local authority is providing a multi-million-pound commercial advantage to rival businesses.


About insidecroydon

News, views and analysis about the people of Croydon, their lives and political times in the diverse and most-populated borough in London. Based in Croydon and edited by Steven Downes. To contact us, please email inside.croydon@btinternet.com
This entry was posted in Boxpark, Business, Croydon Council, East Croydon, Jo Negrini, Property, Ruskin Square, Tony Newman and tagged , , , , , , , , . Bookmark the permalink.

4 Responses to Boxpark’s £3m loan under threat if summer opening is delayed

  1. derekthrower says:

    More signs of nervousness about the Hong Kongnisation of East Croydon. Do they detect cash flow problems with the Far East ?

    Liked by 1 person

  2. I must say this whole Boxpark thing stinks. Not least of all, its business model fatally flawed. How on earth can the powers that be believe that a food only policy will work is plain daft. If nothing else the competition from each other will force prices down and inevitably lead to those taking up leases within Box park to prematurely close.
    To have mirrored the Boxpark in London would be a far better idea. Independent clothing shops plus fooderies will have created a customer base for all involved. It will have given people a reason to visit Boxpark. I guarantee that the vast majority of footfall from East Croydon will barely give Boxpark a sideways glance.
    And to think that Croydon council have sponsored the bloody thing…it really doesn’t say much for their business acumen.
    I am very disappointed that what might have been a good idea for Croydon, particularly during the building of Westfield, will end up being a desperate half empty disaster that reflects appallingly on a town that is looking to regenerate itself.

    Like

    • Keep up, David: as we reported last summer, the council made the loan to Boxpark without attaching any conditions as to what format Boxpark Croydon would take, and Negrini and her merry band only discovered the Boozepark plan at the launch when Roger Wade announced it last July.

      Liked by 1 person

  3. fluffyand40 says:

    The other thing to bear in mind is the money already flushed down the loo for the site over the failed arena plan….more taxpayer cash wasted for a vanity project.

    Like

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s