Plans for a 300-bedroom hotel are likely to be brought forward in a fresh attempt to kick-start Birmingham’s £400 million Arena Central scheme.
City council leaders have been asked to change a development agreement with the project’s financial backers, making it easier for work to begin.
It means that Arena Central Developments, the group behind the huge mixed-use scheme, can build the hotel on Holliday Street without triggering the full leasehold payments envisaged in the original agreement with the city council.
The move is the latest of several initiatives aimed at beating the economic downturn which has prevented any work beginning on Arena Central other than clearing the former Central Television site at the bottom of Broad Street.
When it was launched 10 years ago, the project consisted chiefly of expensive apartments including 700 in a 50-storey block named the V Tower.
Falling property prices and the collapse of the buy-to-let market resulted in a re-think, with fewer apartments and more offices.
However, the centrepiece V Tower, with a skyline restaurant, is still planned and will be built by developer Dandara when the property market recovers.
The city council cabinet property committee is expected to agree to a request by Arena Central Developments (ACD) to allow the hotel to be built without triggering the full Section 106 payment due on draw down of the lease, but still allowing the council to receive a capital receipt for the Holliday Street site.
Work is likely to begin by the end of next year and it is expected that the hotel will be three or four star, with the intention of cashing in on demand for overnight accommodation from conferences at the International Convention Centre.
Planning permission has existed for 2.3 million sq ft of mixed-use development at Arena Central since 2000, making the 7.6 acre plot the largest vacant building site in Birmingham city centre.
Earlier this year ACD won planning permission to increase the maximum permitted office space from 500,000 sq ft to no more than 800,000 sq ft, claiming that the increase would eventually generate more than 2,000 new jobs.
It was hoped the change would prove attractive to developers, although there appears to be little prospect of any tenants coming forward.
Martin Guest, managing director of CBRE Birmingham, joint letting agents on the scheme with GVA, said there would be no speculative office building in the current economic climate. Mr Guest added: “There are discussions on-going, but no really strong enquiries.”
He said the decision to move ahead with a hotel reflected the resilience in Birmingham of business and leisure tourism. The Arena Central site already contains the Crowne Plaza Hotel, which has recently been refurbished.
Mr Guest added: “We are in a challenging climate and we want to pump prime the site with a new hotel.
“There are a limited number of occupiers around but one sector that is still doing quite well is hotels.
“We had hoped that the office element would come forward sooner but we have been delayed by the recession. The plan is to push ahead with the hotel because there is demand out there with operators still prepared to build new facilities.”
