THE business model of an innovation centre in Cwmbran is to be reviewed after several companies left the site, leaving Torfaen council facing financial losses.
Springboard Business Innovation Centre – a joint venture between Torfaen council and Welsh Government – was launched in 2006 as a “flagship for entrepreneurial activity”, costing £4.1 million.
It is based on the principle that companies receive support to help them grow quickly and ‘graduate’ from the centre, creating jobs in Torfaen and space for more companies.
In the first two years, 24 companies had graduated and 34 remained, and in 2019 occupancy levels were at 87 per cent.
‘Hit by the Covid-19 pandemic’
However a council report says the centre at Llantarnam Park has been hit by the Covid-19 pandemic, and there are now 13 tenants, one which includes Gwent’s Covid-19 track and trace team.
A review is to be carried out before the council could consider “whether another organisation could run the asset”.
Three companies have left since the Covid-19 pandemic, with a further two reducing the amount of space they rent, according to a council report.
The current vacancy rate is 58.4 per cent, while an occupancy level of 95 per cent is required to break even.
A loss of £93,000 is predicted this financial year, and a council report says that without “significant intervention” the innovation centre will have “a significant adverse effect” on council budgets.
The current operating model is based on offices being let to companies, but whether this “remains fit for purpose” is now being reviewed by Torfaen council.
Instead, council bosses are looking at ways to create a community of businesses to help attract new tenants.
A full review, to look at creating this, is being carried out with Oxford Innovation, which manages innovation centres across the UK.
This will include a financial review, looking at operating costs and a pricing structure, and allowing the council to “understand the potential for the centre”
It will also consider sources of demand for the innovation centre and a market assessment, including a commercial review of pricing and service delivery.
A building review, which will make recommendations on any upgrades which could help make the site attractive to tenants, will also be included.
The overall review will allow the council to make “an informed decision” on how to proceed with the centre.
A report says the council will consider whether the new model returns to the “principles of a business innovation centre”, or whether it becomes rented office space at a lower rental value.
The council could also consider “whether another organisation could run the asset” following the outcome of the review.
Councillors on Torfaen council’s prosperous communities overview and scrutiny committee will consider the operating model and make recommendations about potential options for the future of the site at a meeting on Wednesday.