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Banbury’s Castle Quay expected revenue drops by nearly £1m

Cherwell District Council is ‘undertaking a strategic review’ of Banbury’s Castle Quay after wiping out almost £1million of revenue it expects the center to achieve this exercise.

The council’s latest monthly performance, risk and finance monitoring report revealed that it forecast the centre’s net income to be £927,000 lower than originally budgeted, almost three times the shortfall of £315,000 £ expected in July.

In order to balance the books, the council is setting aside up to £3.5million from its capital budget, money to fund projects at Castle Quay which are currently ‘not progressing’ while under review.

Presenting to the rest of the Cherwell executive this week, portfolio holder for financial adviser Adam Nell (Con, Adderbury, Bloxham & Bodicote) read an explanation directly from the board’s report which cited slow and withdrawn interest in the units from Castle Quay.

“In general, challenging global economic conditions and inflationary operating costs have a direct impact on tenant uptake of housing,” he said.

“This translates into vacant units that remain vacant longer and therefore an increase in vacant unit costs.

“We are currently undertaking a strategic asset review to ensure our plans for the center remain aligned with the rapidly changing retail environment. This means that while the review is ongoing, we are not advancing some of the projects that were previously planned.

“In addition, other alternative use projects that were due to start are now being reconsidered by potential tenants due to their own financial difficulties and as a result potential occupancy has been delayed. These delays are now factored into our latest forecasts.

“£3.5 million of revenue previously received had been set aside to fund additional capital projects within Castle Quay. The capital budget has been reviewed and this funding is not required for the projects investments currently planned.

“These funds have therefore been released to compensate for the drop in revenue expected for this financial year. So far this year, £0.927million has been shifted between budgets, meaning Castle Quay is currently on track for budgetary purposes.

“The balance of this reserve will be held to help mitigate future financial impacts.”

A spokesman for the council said the £3.5m had originally been “allocated to the capital budget as an emergency measure”, so its use created “no real capital shortfall”, adding that “there is a revenue contingency for such circumstances.”

The strategic review “has always been planned”, is being prepared and will be published “in due course”.

They said the projects that did not move forward were related to potential alternative uses that could not be discussed due to their “commercial sensitivity”.

They continued: “Despite a challenging operating environment for all commercial owners in the UK, including pressures caused by the energy crisis and weakening market sentiment in the retail sector as a whole, Castle Quay still generates net income for Cherwell District Council.

“We are proactively managing the mall and continuing to market empty units to potential tenants.

“The shopping center is well managed and the financial impact of this forecast shortfall will be offset by revenues from previous years, which have been carefully earmarked for this specific purpose.

“The council will continue to support Banbury through its management of Castle Quay shopping center and new seafront development, which puts the town on the map.”