Splitting a large council-owned shop in two is “favourable” for all parties, according to a senior councillor.
Southampton City Council is planning to offer Aldi discounted rent for 10 years in exchange for the supermarket chain covering the costs of dividing the building at 271 Winchester Road.
The premises, which was bought by the council for £12.09 million in 2016, is currently leased out to home improvement retailer Wickes.
Under new proposed lease agreements, Aldi would fund the build-out work before moving into part of the building, with Wickes remaining in the rest of the unit.
Aldi would enter into a 20-year lease, while Wickes would enter into a new 15-year lease, with their current terms due to expire in 2027.
Cabinet member for economic development Cllr Sarah Bogle said it had been “quite a complicated piece of work” to agree a way forward for the site.
A business case making the argument for splitting the unit into two small units was prepared in November 2021.
The council previously set aside £1.837 million in funding to carry out the work itself in February 2022, but the money was removed from the capital programme in March this year after a review for potential savings.
The overall discount in rent for Aldi over 10 years would equate to a reimbursement of £1.7 million.
Labour cabinet members supported the recommendations to progress the proposed arrangements at a meeting on Tuesday, December 17.
The item requires approval from full council, which will be sought at a meeting in February.
Cllr Bogle said: “The idea is instead of one occupier, it is going to be split into two.
“A deal has been agreed which is favourable to the council and all parties, and I think all parties are happy to move forward.
“This is purely a decision in terms of the property arrangements, the leasehold arrangements to actually separate one lease into two.”
She added: “I’m really pleased this has finally come to cabinet. Because of the value, it will be going to full council in February as well so it won’t be fully ratified until that point.”
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