Phase two of Crewe town centre's Royal Arcade development is now under serious review, with the current scheme set to be delayed or scrapped next week.

On Tuesday 14 November, Cheshire East Council's economy and growth committee will consider a report on the current position and challenges with the delivery of phase two of the scheme.

They will review factors including double-digit inflation, the cost-of-living crisis, and the government's decision to scrap the HS2 northern leg, increasing pressure on the project's viability. 

Phase two of the Royal Arcade is planned to be mixed-use and focused on leisure activities, but this is now under threat (Cheshire East Council).

Work on phase one of the Royal Arcade, a new bus station and multi-storey car park, is advanced, but its completion date has been pushed back to spring 2024.

It will providing modern transport facilities for visitors to the town, freeing up other car parks to allow for further development projects to progress. 

Phase two of the Royal Arcade is planned to be mixed-use and focused on leisure activities, but this is now under threat.

Vice chair of Cheshire East Council's economy and growth committee, Cllr Nick Mannion, said: "In October 2020, the council entered into a development agreement to deliver the Royal Arcade scheme in two stages.

"The leisure-led part was due to get underway once the new bus station and multi-storey car park had been completed.

"Three years ago, that was fully viable. But across the UK, the viability of commercial-led leisure and retail developments is being met with challenge after challenge.

Vice chair of Cheshire East Council's economy and growth committee, Cllr Nick Mannion (Cheshire East Council).

"Not least double-digit inflation in construction costs, increases in interest rates, the cost-of-living crisis, and a decline in town centre investment values by some 20-25% over the past two years.

"These challenges, which remain, were not foreseen, and there were major rises in costs over a very short period.

"Add to this the recent decision by Government to scrap HS2 north of Birmingham – a huge blow to market and Investment confidence in Crewe.

"It is evident that phase two of the Royal Arcade scheme has been seriously impacted and there is a significant financial viability gap.

The report to the economy and growth committee identifies four options for the future use and development of the Royal Arcade site.

A primary recommendation has been given to advance plans for using the site for 'meanwhile uses'.  

Work on phase one of the Royal Arcade, a new bus station and multi-storey car park, is advanced, but its completion date has been pushed back to spring 2024 (Ryan Parker).

Cllr Mannion added: "Despite these significant and ongoing challenges, our development partners Peveril Securities Ltd, and their development managers, Cordwell Property, have been proactively engaged with the council to identify ways of reducing this growing viability gap and explore other development options and ways of funding this.

"However, the council recognises that due to the economic picture nationally, phase two cannot currently be delivered. 

"We must now take a decision on how we move forward.

"One option is to sit and wait for the economy to improve and for our development partners to then progress phase two.

"But, this could see us waiting for five or six years, which is not a positive step for Crewe.

"Or we look at how we can deliver something that generates activity and footfall in the town centre as soon as possible, is financially achievable now, and complements the multiple other fantastic projects being developed."

How Crewe's new multi-storey car park and bus interchange will look once it is completed in spring 2024 (Cheshire East Council).

The following four options have been proposed:

Option 1: Proceed with the development – but identify other sources of public sector funding to address the viability gap.

Option 2: grant a 12 - 24 month extension to the existing development agreement with Peveril Securities to let the market settle and provide a temporary meanwhile use.

Option 3: Terminate the development agreement and consider the potential for a smaller scheme and/or alternative uses, including potential sale/lease (e.g., housing, hotel, offices), other council/public sector development opportunities, or retain some/all for public use (e.g., public space/park).

Option 4: Terminate the existing development agreement and seek to use the site as an urban/ pocket park or other 'meanwhile uses'. 

'Meanwhile uses' are temporary uses for land/properties that are expected to have a longer-term development outcome.

They are frequently used to add vibrancy to town centres through a range of different commercial and non- commercial activity.

Double-digit inflation, the cost-of-living crisis, and the government's decision to scrap the HS2 northern leg, has placed increasing pressure on phase two of Crewe's Royal Arcade scheme (Ryan Parker).

Their temporary form can allow for quicker changes to the type of use and so be more responsive to local demand and provide opportunities for seasonal activities.

Read the full report and recommendations to 14 November's economy and growth committee HERE.

READ MORE: Popular pop-up shop opens in Crewe shopping centre for Christmas period.

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