Edinburgh House - Lease Surrender

Edinburgh House is an office in Kennington providing 6,000 sq m of space and 787 desks, with low utilisation. A number of functions have already re-located and the remaining teams are scheduled for re-location to existing MOPAC sites in January 2016. There is no public facing facilities at this location.

The existing lease has a break clause at 25 December 2020, and the proposal is to surrender the lease in March 2016, delivering full year revenue savings from the start of 2016/17.

The one off cost of works at other sites to accommodate the remaining Edinburgh teams will be funded from the existing capital programme, and the surrender/dilapidations costs are proposed to be funded from the dilapidations reserve.

The DMPC is asked to approve

1. the proposal for the early surrender of the lease for Edinburgh House, and
2. the use of the dilapidations reserve to fund the surrender cost

Issues for consideration

1. Under the lease a rent review is due in December 2015, and the next scheduled tenant break clause is in December 2020. Based on current rental values in the area the rent is expected to increase at the next rent review.
2. “In principle” terms have been negotiated with the landlord to surrender the lease with effect from March 2016, taking account of dilapidations, and with the planned rent review in December 2015 being waived. The anticipated annual revenue savings will contribute to the planned Corporate Real Estate (CRE) savings target. The detail and financial implications of the proposed surrender is set out in Part 2.

Financial Comments

1. The cost of relocating the remaining teams at Edinburgh House is estimated at £875k. This will be funded from the existing approved capital programme.
2. The cost of the surrender is detailed in Part 2 and will be met from the specific dilapidations reserve. On-going revenue savings will accrue with effect from 2016/17 following the exit and surrender of the lease.

Legal Comments

1. The MOPAC has the power to acquire and dispose of properties (including land) under paragraph 7 (2) (b) of Schedule 3 of the Police Reform and Social Responsibility Act 2011 (“the Act”).
2. The Commissioner may also do anything which is calculated to facilitate, or is conducive or incidental to acquiring and disposing of property (apart from land) but only with the consent of MOPAC under paragraph 4 (2) (b) of Schedule 4 of the Act. The Commissioner must also under s4(3) of the Act exercise the power of direction and control conferred upon him in such as way as is reasonable to assist the MOPAC to exercise that Office’s function.

Equality Comments

1. There are considered to be no equality or diversity issues arising as a result of this proposal.