City leaders line up cut-price bid for vacant GPO building

Waverley Gate is on the market after the property firm behind the 100 million revamp of the former General Post Office building on Waterloo Place fell into administration, and the city council is among those keen to snap up the site at a bargain price.

If successful, the council would look to bring staff from other offices it leases under one roof to reduce costs. It is also keen to use the site as a means of attracting major firms into the Capital.

It is not known what price previous owner Castlemore paid for the site, which lay empty for more than two years before Microsoft moved into a small part of it. However, it is understood that it turned down offers in the region of 70m-80m in recent years.

A lack of bank lending availability, together with the general collapse in property values and concerns about the quality of the office space at Waverley Gate, is expected to mean that it will now fetch little more than 30m.

Dave Anderson, director of city development at the city council, said: "Up until now, our strategy has been to locate our properties in neighbourhoods and by putting more people into Waverley Court. That said, Waverley Gate is in a good strategic location and we are keen to explore the possibilities. However, any arrangement would depend on price."

Under Castlemore's ownership, some of the highest rents in the city have been offered to potential tenants, and the firm has refused to reduce them despite the slump in demand for offices.

It is understood that the council would look to significantly reduce rents in order to encourage high-calibre businesses into the city at a time when it is very difficult to attract new firms.

The council believes that getting companies to occupy the building is essential if it is to encourage the vibrancy of the city centre.

The rental income it could achieve from the building is expected to cover the cost of buying the office, which it would be expected to pay for through prudential borrowing.

"As would be expected, we have taken an interest in all the major developments in the city, and the impact that current economic conditions are having on them, to ensure we can best champion their ongoing success," said Mr Anderson.

"This includes examining opportunities to encourage new business to come to the city. However, any arrangement requires the council to be able to demonstrate that it is best value and in the common good for the city."

The purchase of Waverley Gate would be expected to lead to staff in offices such as Chesser House relocating to the building when leases come to an end.

One property insider said: "There won't be a huge amount of companies interested in this, so the council will be in a strong position."

Nobody was available to comment at Castlemore administrator BDO Stoy Hayward.