Defra minister Lord Bach has invited New Covent Garden tenants to enter direct dialogue with him over the future of the market.
This latest positive step came following the publication of the executive summary of a long-awaited report commissioned by Defra for the disposal of its Nine Elms site. The report produced by consultant Pricewaterhouse Coopers (PwC) appears to play into the hands of tenants hoping to acquire the market in a joint venture development with Nick Saphir.
“This means that the tenants will rightly be at the forefront of any decisions that are made regarding the future of the market,” said tenants’ association president Gary Marshall. “If ever there was a time when tenants should be a member of the association it is now. We represent just under 70 per cent of let space and our goal is 90 per cent plus.” The association and Nick Saphir have already begun drawing up a joint venture contract to formalise their agreement reached last year for a potential buyout of the market.
Only the executive summary of the report has been published as the full version contains commercially sensitive information. Among key conclusions is that the market is not commercially viable in the long-term operating as it does now. The report said it generates a low return and is unable to fund the significant capital investment required to maintain facilities at appropriate standards, which in turn constrain the market authority’s ability to redevelop it. “As a result it is unlikely that the market in its current form would be considered as either an attractive or commercially viable business proposition by a private sector investor,” the summary stated.
Marshall disputes this claim. “In 32 years the market has always been in profit,” he said. “We have had no hnadouts and no state funding. In my opinion, if it is not viable then that is the fault of the market authority for not going out and marketing it -15 per cent of the site is not let. What the market needs is investment. Not on the part of the tenants; we have made massive investment in the premises. Major investment is needed to upgrade the 40-year-old building and refurbish the offices, for example.”
The report’s summary recognised that the market has valuable core assets such as its property base, established network of suppliers and clients, and its name and reputation and concurred with Marshall that long-term commercial value could be generated, given business development and investment.
Saphir also welcomed its conclusions. “I believe that what PwC is flagging is that if the government wants to maximise the value of the site and retain the market, it should seek proposals that allow the market to develop commercially. Our scheme would seek to develop New Covent Garden into a vibrant food-sector service centre, including a market.”
The PwC report also points to Defra undertaking master-planning prior to agreeing a strategic development brief with the planning authorities and before taking the site to the market. “This would also allow for the authority to feed in the requirements for the physical shape of the market going forward based on a developed strategic vision,” the summary stated. “This would in turn be influenced by Defra’s views about the extent of the market facilities which it was intended to preserve going forward.”
Lord Bach said: I am looking forward to hearing the authority’s considered views and will be consulting the tenants’ association and other stakeholders as work progresses.”
Any disposal of the market will require legislation which is not likely to be passed until 2007-08.
