Galbraith Commercial Matters Summer 2019

Commercial

MATTERS

ISSUE 9 | SUMMER 2019

Towering transformation Converting Barnbougle Castle n n n n

Property fundamentals Strong outlook for holiday park sector Buyer trends in the UK investment market Planning: the key for town centres

WELCOME

Finding new uses for older properties dESpItE Brexit, our economy continues to thrive, and we anticipate this will continue beyond October when we may – or may not – understand the next phase of the process.

Outside of the political world, we monitor with keen interest the changing nature of the retail sector and, in particular, the impact on our high streets. there are opportunities to emerge for new and different uses for the shops and stores closing down through a collaborative approach with planners and occupiers alike. thinking ahead and understanding the detail is critical in these times.

At Galbraith we are fortunate to have a breadth of knowledge and experience to advise on most aspects of commercial property from an ownership or occupier perspective. diversification is key and bringing new uses to older properties is highlighted by the exceptional Barnbougle Castle project, which seeks to bring activity to a wonderful historic building on the edge of Edinburgh.

CONTENTS

4 How holiday parks benefit from Brexit.

Galbraith and Land Factor merge.

6

COVER STORY: A forgotten castle gets a new lease of life.

8 UK investment market update.

NEW SERIES: Investing in commercial property.

10 Deal round-up.

12 See you at the shows!

13 A 12-year journey to developing 600 new homes.

Richard Higgins

14

richard.higgins@galbraithgroup.com

What’s the key for town centres?

01786 434625

15 People.

Capital development

GALBRAITH is a leading independent property consultancy. drawing on a century of experience in land and property management, the firm is progressive and dynamic, employing 240 people in offices across Scotland and Northern England.

Harry Trotter investigates the new Edinburgh St James development.

We provide a full range of property consulting services across the commercial, residential, forestry, rural and energy sectors.

In Its former life, the st James Centre was a 1970s eyesore on the side of Edinburgh’s historic new town.

Galbraith provides a personal service, listening to clients and delivering advice to suit their particular opportunities and circumstances.

It was a maze of retail stores and fast food outlets which had been in gradual decline for years.

In 2006 Nuveen purchased the site, and so began a 10-year process of planning and design which involved the upper echelons within Scottish Government and Edinburgh Council. Some 13 years later, the development is now breaking into Edinburgh’s historic skyline.

Follow us on twitter: @Galbraith_Group @Galbraith_COM Like us on Facebook: www.facebook.com/ GalbraithPropertyConsultancy See us on Instagram: www.instagram.com/GalbraithGroup Join us on LinkedIn: www.linkedin.com/company/galbraith

Commercial Matters is produced by JK Consultancy, Glasgow, and designed by George Gray Media & Design, St Andeux, France. © CKd Galbraith LLp.

Page 2 | Commercial Matters | summer 2019 | galbraithgroup.com

At 1.7 million sq ft and valued in excess of £1 billion, Edinburgh St James is one of the largest and most significant regeneration projects underway in the UK – and the largest city-centre development in decades.

Located in the east end of Edinburgh’s New town, the development aims to redefine retail-led mixed-use regeneration and reposition Edinburgh as one of the most exciting, forward-thinking and sought-after destinations for retail and leisure operators in Europe.

Edinburgh St James will comprise 850,000 sq ft of retail space, the UK’s second ever W hotel, 152 unique apartments, 30 restaurants, a Roomzzz aparthotel and the city’s first Everyman cinema with 1,600 off-street parking spaces – not to mention the nine flexible events spaces to host Edinburgh’s rich cultural activity.

It will provide long-term benefits to Edinburgh, pushing the city up six places to eighth on the UK retail ranking as well as creating over 3,000 permanent full-time jobs and up to 5,000 jobs during the construction period, which is now more than 50% complete.

Ed Webb, director of development at Edinburgh St James for tH Real Estate said: “this development is a game-changer. We have some fantastic names already confirmed, including Next, John Lewis, a flagship for Boots and many more. We’re having a number of conversations with other interested occupiers which we’ll be announcing in the coming months. “the biggest challenge has been maintaining the efficient continued trading of John Lewis - which

is expanding as part of the development - while we have demolished in part above, around and excavated beneath them.

“We‘re confident that Edinburgh St James will provide a diverse and appealing shopping experience, comprising well-known national and international high street names, aspirational and high-end brands, which cater to a diverse range of consumers, from locals to tourists and visitors from the rest of the UK, Europe and the world.”

He continued: “Edinburgh is forecast to achieve a £2.5 billion consumer market potential by 2021, and while it is no secret that the retail market is currently struggling, this represents an evolution as opposed to ‘the end’.” the retail and leisure element of Edinburgh St James will complete in October 2020, followed by the completion of the W hotel and residential aspects in 2021.

“

We‘re confident that Edinburgh St James will provide a diverse and appealing shopping experience.

While the final design of the hotel has divided opinion, whatever your thoughts, the positive impact on Scotland’s capital cannot be ignored.

We await with interest the wider influence on the Edinburgh market.

harry.trotter@galbraithgroup.com 0131 240 2288

galbraithgroup.com | Commercial Matters | summer 2019 | Page 3

Holiday park ‘staycations’ on the up Harry Stott reveals a strong outlook for the sector with the £1.2m sale of a Scottish caravan park.

At the end of 2018 we were involved in the sale of Doonpark Holiday Park near the small village of Kippford in Dumfries and Galloway in south-west scotland.

A successful family-run business for 50 years, it is a popular destination for holidaymakers with a high percentage of long-established residents passing on their pitches to the next generation.

After being placed on the market in June 2018, doonpark, which extends to about 10.75 acres (4.35 hectares) and is licenced for 154 units, enjoyed a significant level of interest from established national park operators looking for an opportunity in a renowned holiday destination. there was also interest from local operators and new

entrants into the market who sought an opportunity for a new venture or a change to their work/life balance with the benefits of living in beautiful surroundings and the prospect of taking on an established and popular business. the sale, which also included a wellappointed four-bedroom house, was completed at an offer in excess of the £1,200,000 asking price, with 10 offers received and was sold to a local operator with a similar ethos and vision for the park as the sellers. the level of interest in the park demonstrates the strength of the market in the holiday park sector which has been largely brought about by the circumstances surrounding Brexit. the

Page 4 | Commercial Matters | summer 2019 | galbraithgroup.com

UK’s withdrawal from the EU has dominated the headlines with many commentators predicting a significant detrimental impact on the UK economy.

Conversely, the leisure and holiday park market has remained resilient to the challenges in the wider economy. the fall in the value of the pound has actually made the UK a more affordable holiday destination for overseas visitors and UK residents alike. Accordingly, many holiday and caravan parks reported improved trading conditions, which in turn underpinned values. the weather does play a part in determining the outcome of a trading season and holiday parks located in Scotland are arguably more sensitive to

Galbraith expands North of England presence with Land Factor merger GAlbrAItH has merged with land Factor, a specialised rural estate management company, providing land management, development and forestry services from its offices in northumberland and Cumbria. the merger took effect on April 1, 2019 with Land Factor becoming a fully integrated part of Galbraith. Land Factor personnel will continue to serve the needs of existing clients as part of the Galbraith team.

Iain Russell, chairman of Galbraith, said: “We are delighted to have merged with such an established and successful firm as Land Factor. Both firms currently operate across the border and joining forces will enable us to provide enhanced services across a wider geographic area.” tom Warde-Aldam, director of Land Factor, said: “We have taken great pride in building a successful firm offering specialist estate and land management services and being part of Galbraith will enable us not only to continue providing these services but to explore new opportunities.

“

Being part of Galbraith will enable us to explore new opportunities.

climatic variances than the rest of the UK. the sector got off to a slow start with the arrival of the “Beast from the East” but was given a boost with the record-breaking summer of 2018 that followed. there has been an increase in market activity for holiday parks across the UK with corporate groups adding to their existing portfolios. However, the industry is fragmented with a reasonably large number of purchasers seeking to buy smaller parks.

this, coupled with more availability of funding, has led to greater confidence and projected trading conditions.

Interest in holiday parks is predicted to be strong through 2019 as demand outstrips supply by a significant margin. the demand is further enhanced by the banks reacting favourably to the sector where they can see growth. the outlook for the sector is good and demand is strong at all levels and sizes of parks in established and popular holiday destinations.

“Both ourselves and Galbraith have for many years been committed to an ethos of being independent companies providing the highest quality of personal service.

— Tom Warde-Aldam these shared values, plus having greater strength and depth, will serve the interests of clients.” the commercial team at Galbraith looks forward to combining our market knowledge and experience and offering our services throughout the north of England.

We see it as an excellent launch pad to expand into new markets and bring our expertise to bear in a range of sectors, including planning and strategic development land together with more mainstream commercial agency. richard.higgins@galbraithgroup.com

these tend to be new entrants after a lifestyle change following the sale of another small business or residential property.

0131 240 6966 harry.stott@galbraithgroup.com

tom.wardealdam@galbraithgroup.com

01786 434630

01434 405960

galbraithgroup.com | Commercial Matters | summer 2019 | Page 5

COVER STORY

Preserving the past for a commercial future Martin Cassels who project managed the extensive work to convert Barnbougle Castle explains what was involved.

tHE challenges facing rural estates and landowners have never been more acute. the expertise and multi-disciplinary approach from the commercial, rural and building surveying teams at Galbraith are helping one key client to deliver successful diversification into the commercial field using their rural assets.

Barnbougle Castle, which sits on the shores of the Firth of Forth, has just undergone a discreet but thorough refit, and the category A listed castle opened in May 2019 as an exclusive use venue for weddings and corporate events. the success of a project that involves extensive intervention in the fabric, and which must both conserve and preserve, can often be judged by initial reactions from the first visitors. there is no greater compliment than this comment received at Barnbougle: “My goodness, this is amazing.

Has anything actually changed?”

Succeeding in converting a building such as

over 10,000 books was beginning to suffer from the dampness, with mould growing on books, artwork and furniture, and there was a real risk of more serious problems occurring.

Having dealt with the external envelope, the more involved internal phase of work began in 2018, after extensive preparation. With wiring from the 1950s and no working heating, the scope included full rewiring and re-plumbing, a new electric heating system and installation of a lift, commercial kitchen and toilets to cater for the events. this was very challenging given the history and requirements of modern building regulations when endeavouring to make a historic building compliant.

One crucial decision was to install a sprinkler system for fire suppression. Not only did this help with technical compliance, but it also gives comfort that in the event of fire, the valuable contents and building will have a much reduced risk of damage. With the devastating fires recently at the Glasgow School of Art and Notre-dame Cathedral in paris, focus on fire prevention and suppression has never been so critical.

Although many of the building’s features are original, a beautiful “faux library” partitioned room creates a new cloakroom and toilets, together with a “ladies’ boudoir” on the ground floor. the book titles were carefully chosen by Lady Jane Kaplan, daughter of Lord Rosebery, who oversaw every detail of the project. the original marble bath, formerly filled by sea water, was preserved and returned to full working order, along with the magnificent bookcases, panelling and original light fittings. the end result is a unique and stunning castle within 20 minutes of both Edinburgh city centre and Edinburgh airport, yet with a feeling of remoteness and exclusivity. the first events were held in May. See www.roseberyvenues.co.uk for more details.

Barnbougle for event use, but preserving its character and features, having been unused for 90 years, is no mean feat.

Lord Rosebery and his family embarked on the project in 2016 and committed significant investment. the initial phase involved exterior repairs. Over many decades, water ingress from roof leaks, defective pointing and gutters had damaged many areas internally, staining historic wallpaper and panelling. the collection of

Page 6 | Commercial Matters | summer 2019 | galbraithgroup.com

Jonathan Burrow, factor of Rosebery Estates, said: “the relationship with the Galbraith building surveying team goes back several years when they were appointed by the estate to assist the management team.

Since then, they have become integral in helping to steer significant projects, most notably the renovation of Barnbougle Castle.

“We took the decision to renovate Barnbougle and reopen it as an exclusive hire venue in 2017 as it is one of the finest

THE ILLUSTRIOUS HISTORY OF BARNBOUGLE CASTLE THE Primrose family, the Earls of Rosebery, lived in Barnbougle Castle from 1662 to 1817.

In 1817 the family moved to a new home on the estate, Dalmeny House, which is further inland and therefore slightly better protected from the full force of Scottish weather.

Barnbougle Castle stood empty until in 1881 the 5th Earl, Archibald Primrose, restored it and kept it as his private retreat.

It is said that he loved the peace and seclusion, living there with his collection of 10,000 books after his wife died at the tender age of 39.

The 5th Earl was Prime Minister from 1894 to 1895 and also served as Foreign Secretary and Leader of the House of Lords. He was celebrated as a wonderful orator, writer and historian.

Archibald Primrose is also known for his marriage to Hannah de Rothschild, and the history of their relationship is part of the romance and interest of Barnbougle.

buildings on the dalmeny Estate, and one of Scotland’s most outstanding heritage venues.

“Galbraith was the obvious choice for the role. they have fielded a range of professionals to execute what has transpired to be a somewhat complex project. Building, ground work and planning challenges arose along the way due to the castle’s historical significance with the property dating back to the 13th century. the infrastructure has been sympathetically modernised with original artefacts and features preserved.

“Barnbougle is an outstanding heritage property. the end result is much admired and a testament to the team’s expertise. We’re thrilled it’s open once again and now being enjoyed by many.” the building surveying and commercial teams at Galbraith are working with the estate on a number of similar projects, many of which seek to utilise redundant or underused former agricultural or commercial buildings. At the

southern end of the estate, we are currently project managing another property destined for events, which incorporates luxury shortterm letting accommodation as well. this will provide a different offering, with a more rustic feel, while other developments focus on diversification such as children’s nurseries, storage and office space. the challenges facing rural estates in the current economic and political client are considerable, but with strategic, professional and innovative thinking, assets can be maximised without losing their traditional feel.

Galbraith’s diverse commercial, rural and building surveying teams are better placed than most of their competitors to offer this type of co-ordinated and complete advice to clients.

martin.cassels@galbraithgroup.com 0131 240 6992

The famous painting of Hannah de Rothschild by Frederic Leighton, above, hangs in the parlour – one of the rooms available to those hiring the castle for exclusive events.

The 5th Earl died in 1929 and on his death the castle was closed up and left exactly as it had been during his lifetime.

Today it is being used for the first time in almost a century and is open to the public for the first time ever.

Barnbougle is a building which is imbued with the spirit of Lord Rosebery.

galbraithgroup.com | Commercial Matters | summer 2019 | Page 7

A buyers’ market?

NEW SERIES:

Will Sandwell explores the diverse range of buyers in the UK investment market.

Our market constantly changes in terms of volumes, trends and pricing. the source and flow of readily available equity is one of the biggest influences, as we explored in Issue 7 (Summer 2018) of Commercial Matters. In analysing and defining our market we have to consider macro-economic and political influences, but I’ve tried not to mention the ‘B’ word too much. total Scotland investment volumes stood at approximately £2.6 billion for 2018, which was a slight increase on the 2017 figure of £2.2 billion, and there continues to be a wide range of buyers.

Beyond these statistics let’s explore current buyer trends.

Institutional investors/pension funds probably remain net sellers, mainly due to realising profits from performance (mostly created by yield compression) over the last few years and also due to the political climate and the associated uncertainty. Any quick yield shift in the market is reflected in fund pricing due to quarterly valuations. In acquisitions, the key driver for their continued investment is the identification of core property with the best prospects for rental growth and long secure income.

Listed real estate funds remain active but are very selective. Specialist vehicles in sectors such as industrial and long income have been extremely active, having been successful in equity raising

“

Overseas investor activity is probably as broad as we have ever seen it. and then securing stock due to slightly softer competition from Institutional Investors. Certain property funds will have made provisions for the outward flow of equity and therefore retain a strong (15% to 20%) cash position to cater for such an event.

Overseas investor activity is probably as broad as we have ever seen it, certainly in terms of sources of equity. the German funds are longstanding UK investors, historically targeting prime regional office assets. they have a close eye on Brexit and in this polarised market, prime assets are probably 100 to 150 basis points below their typical target net initial yield.

South African sourced equity was very buoyant five years ago and while we are seeing a resurgence of investors looking at a broad spectrum of asset classes, it is harder to generalise a specific sector. In our opinion they are willing to look at asset management opportunities, including portfolios but with a yield to match, perhaps 7% plus.

US equity mainly entered the UK en masse five years ago in the form of private equity and hedge funds and showed dominance in purchasing NpL (non-performing loan portfolios) sometime at a discount of £0.50 – £0.75 in the £. they excelled at this, but we haven’t seen much direct

investment activity recently. Certain US banks and hedge funds do continue to back UK-based property investment managers. the Middle East and UAE are experienced UK investors, in both London and the regions. We would suggest banks and family offices have been more selective over recent years, perhaps looking at current prime yields and making their analysis over a longer term. We think activity will increase once it is easier to forecast currency fluctuations. the far east, including China, South Korea and Singapore, have been huge spenders in the last 24 months. In 2018 the volume probably doubled with approximately £8 billion of UK investment market volume funded from the region. We don’t see this as a short-term trend either. there are now many formal property investment platforms established. In typical fashion, London has been the initial focus and then the regions come into play 12 months later in order to achieve UK portfolio diversification and identify yield and asset management opportunities.

England and Wales local authorities, funded by long term low interest prudential borrowing, were massive spenders in 2016 and 2017, however we see this activity cooling somewhat. Specific to Scotland, a handful of such buyers have bought here but Scottish local authorities have not widely adopted this investment strategy. Should the investment model prove successful and sustainable we predict additional investment but perhaps more closely managed or regulated via central government. property companies and private equity backed asset management houses continue to be very active. Equity and debt are readily available and such buyers are very focused on building business plans and executing them. Many asset management houses are London based with UKwide property expertise. private investor transaction volumes are more difficult to quantify but sentiment is probably as strong as we have seen it in this cycle, especially for those who are experienced property investors.

Real assets and real returns continue to appeal, whether it be £500k or £50m. debt is also readily available, so some private investors are choosing to create performance via very conservative financing, whereas others are keeping it simple, utilising 100% equity.

At Galbraith, in line with our wider business expertise, the investment team continue to work with a broad spectrum of clients. We don’t believe there is a stereotypical trend, or perfect balance as to who is active in the market. Our role is to advise our clients in the context of the current market and identify opportunities which meet commercial property investment goals, for existing portfolios, sales or new acquisitions.

will.sandwell@galbraithgroup.com 0131 240 6997

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In the first of our new series on investing in commercial property, Jamie Thain lays out the importance of ‘property fundamentals’ when selecting commercial property investments.

INVESTING IN COMMERCIAL PROPERTY

Property ‘fundamentals’ At Galbraith our investment team provides services to a range of different investors from private individuals to institutional funds. the profile of the investments our clients seek varies greatly but one aspect which is consistent is for the properties they buy to have good ‘fundamentals’.

What do we mean by this?

Fundamentals describes the essential qualities of any property and includes attributes like location, size, configuration, age, flexibility and competition. they help us to answer the questions of why a particular property is in a particular location and whether it is likely to still be there in the future performing the same function, or could it perform a completely different function? this is important because it dictates how attractive the property will be to prospective tenants/occupiers and therefore how likely it is to produce a sustainable rental income over time with prospects for growth relative to other competing buildings in the market. In effect, its underlying value. the fundamentals of a property allow us to assess risk and return. the more positive the fundamentals of a property, the more secure the investment/income and the less risk is involved, therefore the lower the returns investors are willing to accept.

For example, a prime, newly developed city centre office building within a market with a low supply dynamic would be considered to have great fundamentals. It should, in theory, be easy to let on attractive terms to multiple tenants who may be competing for the same property. the fact that it is new should mean that maintenance costs/capital expenditure for the landlord, at least in the medium term, will be low and that the

supply/demand dynamic should assist rental growth over time, leading to an attractive and secure investment. this is also likely to make the price high and the returns lower than for properties which don’t deliver on all of the same aspects or fundamentals.

Of course, properties don’t need to be located within a prime city centre location to exhibit good fundamentals, but they do need to have a reason for being. A parade of neighbourhood shops which serves a community has a reason for being there and is likely to be an attractive location for tenants such as small supermarkets, bakers, chemists and so on.

So as long as the units are in the correct location, the right size, in good condition and the location can support them, the property could be said to have good fundamentals. As it is not prime, the parade of shops example would not command the same price and will therefore offer a more attractive return.

“

Older properties in poor condition can still benefit from good fundamentals.

Older properties in poor condition can still benefit from good fundamentals (i.e. be in a good location, provide the size of accommodation occupiers are looking for, etc). this dictates whether a property is worth spending capital on to bring the space back to a condition that will provide a sustainable income stream. Investors who are willing to take on such properties with asset management or refurbishment opportunities can enhance their returns.

Regardless of the scale or sector you wish to invest in or your attitude to risk, the key to any successful investment is to select properties with good fundamental qualities which will provide sustainable income streams and prospects for growth.

jamie.thain@galbraithgroup.com 0131 240 6994

galbraithgroup.com | Commercial Matters | summer 2019 | Page 9

DEAL ROUND-UP

Links House, Edinburgh.

lEAsInGs Fintry House, Hamilton International business Park, Glasgow Acting on behalf of John Lewis Plc, the Galbraith Commercial team secured a lease variation and extension over 39,083 sq ft for John Lewis at Fintry House, Hamilton International Business Park, Glasgow from Praxis Real Estate Management. The lease was re-structured and extended by 10 years with a rent in excess of £560,000 per annum.

scotmid Co-operative, torphins On behalf of ECS Investment Property, Galbraith restructured the lease at a Scotmid convenience store on the outskirts of Aberdeen, taking the certain term from 2.5 to 7.5 years. The annual rent is approximately £45,000 per annum with a fixed uplift RPI-linked rent review in 2021.

Clydesdale bank, 38 High street, banchory We negotiated a new 10-year lease to Clydesdale Bank Plc, on behalf of ECS Investment Property, which included a revised rent uplift to £34,000 per annum.

London House, Edinburgh.

Atholl Exchange, Edinburgh.

Maturation Warehousing, Islay On behalf of an international drinks company, Galbraith negotiated an agreement for lease over 60,000 sq ft of new build whisky maturation warehousing on Islay.

Metro House, Gateshead We advised Anyvan Ltd, the UK’s largest removals firm, in finding and negotiating new office premises in the Newcastle area.

9,000 sq ft was secured at Metro House, Gateshead on a new five-year flexible lease.

Atholl Exchange, Canning street, Edinburgh Acting for the landlord, Galbraith secured Westerwood Group as a new tenant into Atholl Exchange, a 10,000 sq ft central Edinburgh office building. With the third floor under offer, only one floor remains available.

a total of 11,200 sq ft. A further 4,900 sq ft has recently been placed under offer.

Duckburn Park, Dunblane Acting for the landlord, we negotiated a new 10-year lease extension with Tilhill Forestry Ltd over 3,064 sq ft.

london House, East london street, Edinburgh Online drinks retailer, Flavourly has taken a new lease on the ground floor at London House. Galbraith represented the landlord and has a further 3,600 sq ft coming to the market in the summer.

new broompark Industrial Estate, Edinburgh We secured the final letting for the landlord, Buccleuch Property, at this now fully let industrial estate in Edinburgh. A cleaning company secured a lease on the remaining 3,000 sq ft.

links House & Great Michael House, links Place, Edinburgh

Orbital House, Peel Park, East Kilbride

Galbraith advised on a flurry of lettings within these prominent Leith office buildings. Representing the landlord, deals were agreed with The Salvesen Mindroom Centre, Upmo and Allegis over

Galbraith represented the landlord in securing a new three-year letting at Orbital House on 1,764 sq ft to David Brown Group who paid a rent of £26,460 p.a. (£15.00psf).

Orbital House, East Kilbride.

Page 10 | Commercial Matters | summer 2019 | galbraithgroup.com

COMMErCIAl InvEstMEnt 144 West George street, Glasgow Galbraith acquired a prime Glasgow CBD multi-let office on behalf of Topland Group. The city centre asset extends to 32,463 sq ft, is arranged over nine floors and is 93% occupied by a variety of professional occupiers. The office produces an annual rent of £490,834 and was acquired for c£6m, reflecting a net initial yield of 7.77%.

broadmeadow trade Park, Dumbarton Galbraith advised a specialist industrial investor on the acquisition of Broadmeadow Trade Park. Broadmeadow is the prominent industrial estate within the area. The Trade Park has attracted an excellent tenant line up, including Howdens, Screwfix, Jewsons and Dingbro, and produces a rent of approximately £338,000 per annum. The investment was acquired at a price of £3.825m, which reflects a net initial yield of 8.31%.

Craigentinny retail Park, Edinburgh

Craigentinny Retail Park, Edinburgh.

Galbraith was instructed to sell Craigentinny Retail Park on behalf of Cedarwood Asset Management. The asset is fully let to Halfords, Archers Sleepcentre, Connection Flooring and Sue Ryder at a passing rent of £278,500 per annum. Following open marketing and a competitive bidding situation, the property was sold for a price of £3.35m, reflecting a net initial yield of 7.81%.

for a price of £740,000, reflecting a net initial yield of 9.37%.

bridge street, linwood In an off-market transaction, Galbraith identified and acquired this neighbourhood retail investment on behalf of London & Cambridge Properties for £2.25m, reflecting a net initial yield of 8.52%. The parade in Paisley is let to a variety of tenants, including Lloyds Pharmacy, Greggs, Subway and Barnardo’s.

Main street, Wishaw

41a York Place, Edinburgh On behalf of a private investor Galbraith has recently sold this double upper townhouse office to a developer. The property holds a prime pitch on York Place, which neighbours the St James Quarter development, and extends to 2,406 sq ft. The building was sold for £590,000, which reflects a capital rate of £245 per sq ft.

attracted a high level of private investor interest and sold for £610,000, which reflects a net initial yield of 7.81%.

Pavilion 8, Centurion business Park, Glasgow On behalf of a corporate client Galbraith recently sold Pavilion 8 to an owner occupier. The two-storey office pavilion extends to approximately 5,058 sq ft and was sold for a price of £601,000, which reflects a capital rate of £119 per sq ft.

Howdens, Invergordon

ladbrokes, Easter road, Edinburgh

On behalf of Cedarwood Asset Management, Galbraith openly marketed and sold this quality single-let trade counter investment in Inverbreakie Industrial Estate, Invergordon. The unit extends to 10,045 sq ft and is let to Howdens until 2027 at a passing rent of £50,000 per annum. The investment

Galbraith was instructed to sell this retail investment on Easter Road which is let to Ladbrokes until 2022 at a passing rent of £15,000 per annum. The asset was sold to a private investor fo £192,000, which reflects a net initial yield of 7.66%. From start of marketing to settlement, the sale took only 20 working days.

On behalf of London & Cambridge Properties Galbraith has acquired 47-59 & 86-92 Main Street, Wishaw. The retail units are let to Card Factory, Peacocks, Chest, Heart & Stroke Scotland and Poundland, with a total rent roll of approximately £173,000 per annum. The retail units were acquired for a price of £1.675m, reflecting a net initial yield of 9.71%.

41 – 59 Deerdykes view, Cumbernauld Galbraith was instructed to sell Units 41 – 59 Deerdykes View on behalf of Thistle Property Group. This multi-let industrial estate is occupied by a mixture of national and local covenants with a passing rent of approximately £73,000 per annum. The investment was sold to a private investor

144 West George Street, Glasgow, and Pavilion 8, Centurion Business Park, Glasgow.

galbraithgroup.com | Commercial Matters | summer 2019 | Page 11

See you at the shows!

If you are going to any of the following events pop in to our marquee and meet up with the Galbraith team – professionals from across the firm will be on hand for a chat.

Royal Highland Show: thursday 20 June to Sunday 23 June.

Game Fair at Scone: Friday 5 to Sunday 7 July.

Great Yorkshire Show: tuesday 9 to thursday 11 July – Highland Cattle Society marquee.

And look out for our teams networking at some of the following events. they will be easily identifiable as they will be wearing Galbraith gilets. Stop them for a chat!

Scenes from summer 2018: The Galbraith marquee at Fife Show, the firm’s tug-of-war team in action at Scone – and Edinburgh rugby players taking on our hula-hoop challenge.

Belsay Horse Trials, Northumberland: Saturday 1 and Sunday 2 June.

Border Union Show: Friday 19 and Saturday 20 July.

Galbraith Stirling Bull Sales: Sunday 20 to tuesday 22 October.

For a full list of events, visit www.galbraithgroup.com/events

Forestry

All our publications are on our website.

For a printed copy please contact your local office

Energy ISSUE 18

R 2019

ISSUE 2 SUMMER 2019

Rural

ISSUE 7 SUMMER 2019

MATTERS

MATTERS Eye in the sky:

| SUMME

how drones can help foresters

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Rewilding finds growing intere st Galbraith and Land Factor merg e I The road to succe ss for a forest investor I Working toget her to explore the past I Factoring in climate change I

S MATTER

storage: Battery to the The key evolution energy r

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Galbraith facilitates 600 new homes for Edinburgh with sale of development land Harry Stott reviews the complex evolution of a South Gilmerton site from option agreement to sale.

GAlbrAItH has been involved in the successful sale of Phases 2 and 3 at Edinburgh’s south Gilmerton that will see a further 600 new homes built by barratt Homes and Persimmon Homes in addition to the 200 houses already under construction by Miller Homes, in a major expansion of the capital. development land is at a premium within Edinburgh and the 46-acre site, on the southern edge of the city between the suburb of Gilmerton and the city bypass, attracted significant interest from major national housebuilders, resulting in a closing date with several offers.

After we selected preferred bidders and following extensive and complicated negotiations, the site was sold in April 2019 with the construction of the new housing set to start this summer/autumn. this is a fantastic result for our landowner client and while the process appears to be relatively straightforward, it belies the complex 12-year journey we’ve travelled with our client to get to this position.

Our involvement with the site goes back to 2007, around the time of the financial crash. the original instruction came about as a result of the landowner being approached by a number of parties looking to purchase the land speculatively at a level that reflected its existing use at that time – as agricultural land with an element of “hope value” given its proximity to Edinburgh.

Our advice was that, in light of the proximity of the site to Gilmerton and Edinburgh, there were good medium- to long-term prospects of development so we recommended seeking to formalise an option agreement with a housebuilder via a structured process of inviting proposals from housebuilders and land buyers.

We undertook this process with

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It is imperative that landowners are represented right from the start of any discussions with developers.

Mactaggart & Mickel appointed as the preferred option partner. Our role, on behalf of the landowner, was to negotiate the terms of the option to ensure their interests were protected and to continue to monitor the performance of the option holder in terms of meeting set targets for promoting the land through the planning system. the option agreement was signed in 2009 and a planning application submitted in 2014. this was initially refused by Edinburgh council and then approved at appeal by the Scottish Government in 2016 subject to conditions and a unilateral undertaking in relation to education provision with the possible delivery of a primary school on the site. this represented the biggest single Greenbelt release secured by appeal in Edinburgh – an unexpected and welcome result. the planning process was driven by Mactaggart & Mickel who were instrumental in achieving a deliverable planning consent within a much shorter timeframe than originally anticipated.

Once planning consent was granted, we

received interest from Miller Homes for phase 1 development of 200 houses and the site was sold off-market. With a rising market we advised our client, along with support of Mactaggart & Mickel who decided not to exercise their option rights, to openly market the site in 2016, resulting in the successful sale in April 2019.

In our experience, it is imperative that landowners are represented right from the start of any discussions with developers, land buyers and promotion partners. this will ensure their interests are protected and that the optimum value of the land can be achieved through market testing, but also that the principle of market value is established between the parties in an option agreement situation.

Furthermore, the agreement of the definition of abnormal development costs and their detailed review is important to ensure that savings can be made together with minimum price agreement and indexation given the time that can elapse from the signing of an option agreement to the eventual sale.

Galbraith handles a considerable number of option and promotion agreements across Scotland and the North of England and we’re currently involved in the promotion and marketing of development land, extending to more than 1,500 acres and approximately 7,000 units.

harry.stott@galbraithgroup.com 01786 434630

galbraithgroup.com | Commercial Matters | summer 2019 | Page 13

First steps: what’s the key for town centres?

Jay Skinner on the challenge of transforming town-centre retail.

tHE continued decline of the uK’s high streets has been well documented in recent years.

Changing shopping preferences, wider economic trends and general uncertainty in the markets have all played a part. With town centre retail vacancy rates at about 12% and closures likely to increase, we don’t need statistics to tell us that the strong will get stronger (prime Edinburgh / Glasgow / modern format shopping centres). For the weak, it could be challenging.

As well as consumer spending, town centres and high streets have to be attractive places. they are already complex micro-markets with a web of stakeholders including end users (the public), tenants (property demand), private landlords (property supply) and local authorities (the stimulator).

Historically, from a planning perspective, local authorities sought to protect the vitality of core retail areas. this is often done by way of policies, guidance and the use of the ‘sequential test’ and retail impact assessments in considering planning applications.

However, unsurprisingly, the policies could feel out of date, and retrospectively quite ironic, for example: “Ensure a new food-store or retail park is as close to the town centre as possible, but with free parking. At the same time make the core high street inaccessible through parking restrictions.”

So, the new stock is not geographically separated, but equally not integrated into the town centre: it makes it easy for the new

development to be the preferred (and more convenient) consumer choice, while remaining completely familiar. the success and impact of Amazon is quite unbelievable and, combined with failures of the built environment, action is now required.

In a drive to reinvigorate the UK’s high streets, many local authorities are actively encouraging a greater mix of land uses in town centres that are complementary to their traditional shopping function. the first initiatives were leisure and entertainment, but now there has been a push to introduce new residential development into town centres in an effort to increase footfall and boost ailing night-time economies.

At Galbraith, we are engaged with all stakeholders of this debate, and in terms of adopting a pragmatic approach, innovation is key.

We note that concepts are often presented, but speed of implementation has to improve. planning legislation takes time to change, but there is a greater degree of flexibility in the system at a local level now.

For the future, we anticipate: a revival of mixed use development to include residential; increased joint ventures between stakeholders to include local authorities; and improved accessibility, including traditional car parking (countered by reduced carbon emissions). to discuss any planning needs, please contact Calum Innes (01738 456075), Jo plant (0131 240 3030) or myself in our planning team.

jay.skinner@galbraithgroup.com 0131 240 6978

Page 14 | Commercial Matters | summer 2019 | galbraithgroup.com

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We don’t need statistics to tell us that the strong will get stronger.

PEOPLE

Investment team welcomes partner promotion GAlbrAItH has promoted Will sandwell, right, to partner in a move that recognises his commitment and professionalism.

Will joined Galbraith in 2017 as an associate in the commercial investment team, working closely with partner Jamie thain and based in the Edinburgh office. He has 12 years’ experience advising institutional investors, banks, property companies and private individuals across a wide range of assets.

Recent workload includes the £15m of acquisitions for topland Group including multi-let office acquisitions in Glasgow and an industrial sale and leaseback. He also acted for thistle property Group in the acquisition of Forth and playfair House in the centre of Edinburgh. Sales mandates have been secured for a £36m multi-let Scottish industrial portfolio, and various consultancy roles for corporate clients including John

Lewis, Bunzl and various international distilleries.

Will said: “I am delighted to be joining the Galbraith partnership and taking on a senior role in the commercial department and our wider business.

We established the investment department only two years ago, have built strong market coverage and concluded a number of very significant transactions on behalf of our broad spectrum of clients.”

Richard Higgins, head of commercial at Galbraith said: “Will is one of the most active investment agents within the Scottish industrial market and this promotion recognises the instrumental role he’s played to further develop our commercial property business in the past two years. the firm is continuing to extend our reach and activity across the UK and investment is an important core area of expertise.” will.sandwell@galbraithgroup.com 0131 240 6997

New senior property manager joins Edinburgh office AlIsOn MClEAn, left, has been appointed to manage a wide range of portfolios across the uK and work on a number of commercial projects with our building surveying and asset management teams.

and type, from single-let shops to multi-let office blocks. Being the main contact for the tenants as well as the client requires excellent people skills and the ability to juggle several different tasks at once.

With more than 13 years’ experience managing more than 150 properties and hundreds of tenants, Alison joins our commercial property management team from Mid-Lothian Council, where she acted as the client and dealt with everything from lettings and marketing to lease renewals and rent reviews.

“With properties spread across the country it means that no two days are the same and the week can vary from travelling to different locations out on site to catching up with paperwork and colleagues in the office.

Alison works alongside Richard Higgins and pamela Gray. She said: “Being part of a wellestablished and commercial property management team has been a fascinating journey with much to get to grips with. I manage a number of portfolios, all vastly different in size

“the first quarter of this year has been an exciting and busy one and I look forward to continuing to develop relationships with our clients and tenants and to build upon these to generate further opportunities.” alison.mclean@galbraithgroup.com 0131 240 6981

Jamie celebrates professional success GAlbrAItH is delighted to have a newly qualified surveyor in its Edinburgh office.

Jamie Addison-Scott recently passed the Assessment of professional Competence and is now a member of the Royal Institution of Chartered Surveyors.

Jamie started with Galbraith in 2016 as a graduate surveyor after studying economics at Newcastle University, followed by a Masters in real estate at Glasgow University. Jamie will continue to work in the Edinburgh office as a member of the investment agency team.

Jamie said: “Galbraith has provided me with a wide range of training, which was essential in being able to successfully navigate my way through the ApC process.

“My training ranged from property management to transactional work, with all members of the team providing a high level of support throughout. I am delighted to have become a member of RICS and look forward to this next step in my career.” jamie.addison-scott@galbraithgroup.com 0131 240 2287

galbraithgroup.com | Commercial Matters | summer 2019 | Page 15

OUR EXPERTISE n

Agricultural loans (AMC Finance) n Aquaculture n Building surveying n Commercial property & land management n Compulsory purchase & compensation n Energy n Estate management n Farm & estate sales & acquisitions n Farm management n Forestry n Land management n Landlord & tenant issues n Ossian – Extraordinary Experiences in Scotland n Planning & development n Sales & lettings n Sporting management n SRDP & IACS n Subsidy trading & advice n Telecoms & utilities n Valuations

CONTACTS Jamie Addison-Scott Investment agency 0131 240 2287 jamie.addison-scott@galbraithgroup.com George Bouwens Building surveying 0131 240 3031

george.bouwens@galbraithgroup.com

Martin Cassels Building surveying 0131 240 6992

martin.cassels@galbraithgroup.com

Pamela Gray Asset management, professional & valuation, property management 0131 240 6963 pamela.gray@galbraithgroup.com Richard Higgins Agency (investment, oice, retail & industrial), asset management, professional & valuation 01786 434 625 richard.higgins@galbraithgroup.com Calum Innes Agency (development & commercial), planning, project co-ordination, professional & valuation 01738 456 075 calum.innes@galbraithgroup.com Alison McLean property management, asset management, professional & valuation 0131 240 6981 alison.mclean@galbraithgroup.com Pam Over Asset management, project development & co-ordination, property management 0131 240 6965 pam.over@galbraithgroup.com Jo Plant Planning 0131 240 3030

joanne.plant@galbraithgroup.com

Will Sandwell Investment agency 0131 240 6997

will.sandwell@galbraithgroup.com

Peter Scott Aiton Building surveying 0131 240 6967

peter.scottaiton@galbraithgroup.com

Jay Skinner planning 0131 240 6978

jay.skinner@galbraithgroup.com

Harry Stott Agency (development & commercial), planning, professional & valuation 01786 434 630 harry.stott@galbraithgroup.com James Taylor Building surveying 01786 434 610

james.taylor@galbraithgroup.com

Jamie Thain Investment agency 0131 240 6994

jamie.thain@galbraithgroup.com

Lewis Thompson Building surveying 0131 240 6964

lewis.thompson@galbraithgroup.com

Harry Trotter Agency & asset management 0131 240 2288 harry.trotter@galbraithgroup.com