'Funding gap' for hotel and car park proposal

Becketwell Arena is planned to be open by the spring of 2025

Plans for a multi-storey car park and a four-star hotel next to a new entertainment venue in Derby have a "funding gap", the developer has said.

Paul Morris from St James Securities told the BBC they are exploring "every option" to complement Becketwell Arena, which is already under construction.

A report from the developer revealed there was high demand for a new hotel and car park, but that "cost viability is a major issue without significant intervention."

Mr Morris said: "We certainly have not given up on this at all."

The first phase of the Becketwell development saw an apartment block built on the site of the former Debenhams store

The developer said the cost of building the hotel and car park would be "significantly higher than the value" of both projects and third-party support was needed.

Mr Morris referenced the unsuccessful Levelling Up bid of £20m in 2022, which would have used government funding to bridge the "viability gap" for the hotel.

It is understood Derby City Council is carrying out a car park strategy due to plans to demolish the Assembly Rooms car park.

The developer said it makes a "great deal of sense" for the city council to own a new multi-storey car park adjacent to the new arena, which is also in council ownership.

'Terrible' price inflation

"All of the regeneration that we’ve done - whether that’s Wakefield Waterfront, St Paul’s Place in Sheffield - we’ve received grant assistance to bridge the viability gap which builds the market to raise the values," Mr Morris said.

“To build a four-star hotel, the costs are significantly higher than the value of the hotel itself.

"This isn’t uncommon as many councils have had to intervene to borrow the money. But this has become harder due to the borrowing costs."

He said St James Securities and other developers had faced “terrible" price inflation of around 20% over 18 months, as well as higher interest rates.

Paul Morris is the director of St James Securities

Mr Morris said: "The operators of four-star hotels are extremely interested but it requires something to bridge that funding gap.

“In the past, local authorities tended to step in and intervene where they would often own it or provide a wrap lease.

“Councils across the country won’t do that anymore because they’re in difficult positions on their revenue funding for services so it isn’t seen as a priority, quite rightly."

Mr Morris said he hopes to speak to the East Midlands Mayor Claire Ward and the new Labour government to explore ways to secure funding.

'Vibrant' city centre

A spokesperson for Derby City Council said the Becketwell development is "one example of our ambition for the city centre".

They added: "Unfortunately, our bid to the Government’s Levelling Up Fund for funding for a hotel on site was unsuccessful.

"We will continue to work closely with St James Securities, supporting them wherever possible to redevelop the site for new uses which will revitalise the city centre.

“We recognise the need for quality car parking in the city centre, supported by a wide range of public and active travel options, and this is considered in all of our regeneration plans.

"We are transforming Derby into a vibrant city centre with culture at its heart."