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Argyle House Mixed Use Development Appraisal Summary of Recommendations

Heriot-Watt University School of Built Environment Sustainable Design & Development Roland Láposi 2013.12.13.

The aim of this report is to test the viability of the mixed use scheme outlined in the Group 12’s urban design brief. The scheme redevelops the site by partially demolishing Argyle House and converting the rest to a 3 star hotel with 200 rooms. The new mixed use element contains 20 two bedroom and 23 three bedroom private rented and affordable flats, 2696 m2 office, 2940 m2 retail (shop, cafe, restaurant) space. The scheme built upon the complementing effect of the new cultural quarter proposed by the brief on the King Stable’s transforming the area to a thriving tourist, entertainment and urban destination. New connection between Castle Terrace and King Stable’s Lane via the new King Stable’s steps will lead through an intimate public space surrounded by cafes and enhanced by street art and landscaping. The development appraisal based on market analysis recommends the commencement of the scheme only under the SAY maximum £ 1.500.000 net site value.


Index 1.

Scheme proposal............................................................................................................................. 3

2.

Analysis of Market .......................................................................................................................... 4 2.1 UK economic outlook .................................................................................................................... 4 2.1.1 Base rate ................................................................................................................................ 5 2.1.2 Credit availability and Finance Interests ................................................................................ 5 2.1.3 Inflation .................................................................................................................................. 5 2.1.4 UK Property Industry’s performance ..................................................................................... 5 2.2 Office Market ................................................................................................................................ 6 2.2.1 Trends .................................................................................................................................... 6 2.2.2 Take up ................................................................................................................................... 6 2.2.3 Market rents .......................................................................................................................... 7 2.2.4 Market yields ......................................................................................................................... 7 2.3 Retail ............................................................................................................................................. 7 2.3.1 Trends .................................................................................................................................... 7 2.3.2 Market rents .......................................................................................................................... 8 2.3.3 Market Yields ......................................................................................................................... 8 2.4 Hotel.............................................................................................................................................. 8 2.4.1 Trends .................................................................................................................................... 8 2.4.2 Hotel development scene in Edinburgh................................................................................. 8 2.4.3 Gross Operating Profit, Occupancy and Room Rates ............................................................ 9 2.4.4 Market Yields ......................................................................................................................... 9 2.5 Residential Market ........................................................................................................................ 9 2.5.1 Trends .................................................................................................................................... 9 2.5.2 Private rented market rents................................................................................................... 9 2.5.3 Market yields ....................................................................................................................... 10

3.

Scheme proposal and development appraisals ............................................................................ 10 3.1 Residual Site Value: ................................................................................................................. 12

4.

Conclusions and Recommendations ............................................................................................. 12 5.

References ................................................................................................................................ 13

6.

APPENDIX 1 – SCHEME PLANS AND DESIGN ................................................................................. 14

7.

APPENDIX 2 – COMPARABLES ....................................................................................................... 16


1. Scheme proposal The scheme involves a hotel and new mixed use development by partially demolishing existing buildings on the site western wing of Argyle House, and building on Castle Terrace and Lady Lawson Street. The scheme built upon the complementing effect of the new cultural quarter proposed by the brief on the King Stable’s transforming the area to a thriving tourist, entertainment and urban destination. The project redevelops the site by partially demolishing Argyle House and converting the rest to a 3 star 200 rooms hotel with a restaurant on the top floor and a new function/event and barwing both looking at the Castle. The new mixed use has 20 two bedroom and 23 three bedroom flats, of which 32 is private rented and 11 is affordable rented on the Intermediate Rent base on the upper floors. The ground floor accommodates 2940 m2 retail space (shops, cafe and restaurant units) giving place for specialist shopping units on various floor levels as the groundfloor from the Castle Terrace is the 3rd floor from the King Stable’s side. Good quality Grade B offices on 2696 m2 will be located on the first and second floors with small size units with multiplied occupancy. Office units can be connected vertically (different floors) and horizontally through building units in the joining buildings, they also serve as buffer zone for residents. Connection between Castle Terrace and King Stable’s Lane via the new King Stable’s steps will lead through an intimate public space surrounded by cafes and enhanced by street art and landscaping. Limited on site car parking will only be provided for hotel residents; coach tours will drop off and pick up guest at the hotel’s main entrance on West Port. Pedestrian routes, new cycle lanes and parking places combined with public transport upgrades and City Car Club will help to move towards car free environment. Servicing the area including deliveries and waste collection will be done via the King Stable’s Lane. The new development will based on two main zones the ‘perimeter zone’, the frontage and urban edge on Castle Terrace- and Lady Lawson streets, and the ‘inner core’ zone which is behind the main bulks of buildings and embracing the new public places as set in the masterplan. The character of the perimeter zone will reflect the identity of a busy urban quarter on the fringe of the Old Town with ground floor uses, many entrances and reveal new vistas and panoramas through new pedestrian routes and desire lines. The inner core zone comprising the inner facades of the buildings and the King’s Stables open/public spaces within - will reflect on the new culture and art function established in the King’s Stables and the use of street art and the treatment of building facades as art canvasses. The heart of the inner core will be the new ‘piazza’ the King’s Stables square (Appendix 1).


The design is aligned with the principles and approaches introduced by Designing Places and Designing Streets (Scottish Government; 2010) and reinforced by Creating Places (Scottish Government; 2013) policy papers. The proposal is aimed to be a robust and resilient development not only easing on housing shortage and creating a new place for people but contributing to the wider city life by using its transitionary location and position to connect the Old Town – Grassmarket area to the busy life of the Exchange District while improving public amenities, public transport and safety and security of the streets. The retail, office hotel units will enrich employment options in the city centre and significantly increase tourism and gravitas of the area. Illustrative section of mixed use buildings floor

Building 1

Building 2

Building 3

Building 4

Building 5

Building 6

Building 7

Building 8

4th

-

-

-

residential

residential

residential

-

-

3rd

residential

residential

residential

residential

residential

residential

residential

residential

2nd

residential

residential

office

office

office

office

residential

residential

1st

office

office

office

office

office

office

residential

residential

GF

retail

retail

retail

retail /cafe

retail

retail

residential

residential

-1

office

office

retail /cafe

retail /cafe

cafe

retail

retail /cafe

-2

office

office

retail /cafe

retail /cafe

cafe

retail

Scheme concept Mixed Use Units: 

building 1-8

Hotel Unit 

building 9

Public spaces 

PS I: new steps

PSII: new public square

2. Analysis of Market

2.1 UK economic outlook In the beginning of 2013 OECD published its UK survey (2013) marking a steady GDP growth was predicted – 0.9% in 2013 and 1.6 % in 2014 –the first steps of economic recovery after the consequent contraction in previous years. Recent report of Bank of England (BoE, 2013a) on inflation showed that rate of economic growth has already reached 0.8% in 2013 Q3 and expected to surpass the OECD forecast. Consumer spending and investment rates rose robustly in the first half of the year, and the


latest projections suggest that growth will be at around 2-3% in the period till 2016. A growing economy, increasing consumer spending will affect the need for space of enterprises and businesses leading to a slightly bigger, although significantly restructured demand in the next 3-4 years. 2.1.1 Base rate BoE maintained the base rate at 0.5% to support British economy revival (BoE, 2013a). Solid policy decision that base rate remains on the same level unless UK unemployment figures reach 7% which isn’t expected to happen before 2016 (it was at around 7.7% in August). LIBOR is practically on the same level as the UK base rate influencing willingness of financial institutions to lending. 2.1.2 Credit availability and Finance Interests Latest trends (BoE, 2013b) have seen decreasing stock of lending to small and medium-sized enterprises and to large companies in Q3 2013.The overall availability of credit to corporate sector has increased in Q3, and more available than any time in the last six years. Average interest rate margins for prime properties are operating at around 3.5% and secondary properties at around 3.9% above base rate/LIBOR. It means that developments have to take on average 4-4.4% finance interests (AVIVA, 2013). 2.1.3 Inflation Inflation levels are falling in the UK - since June to October inflation decreased from 2.9% to 2.2%. The Bank of England targets 2.1% inflation rate on medium term till 2017. 2.1.4 UK Property Industry’s performance Colliers International (2013) reported that all property sectors apart from retail are expected to see a 1.8 % average capital value growth in 2014 from 0.4% in 2013. Total return was also revised during the year upward from 5.3% in March to 6.2% - highest level since 2012 - in July 2013 and forecasted to be around 7.7% in 2014. Investors are increasingly optimistic and started adapting to the “new” reality by taking on changing characteristics of demand, supply and finance opportunities. The new trend is to move towards value beyond prime locations and sectors (PwC-ULI, 2013) such as the provinces and transitionary/secondary locations. This is in coincidence with the emergence of a more specialised approach – tailor-made developments – by reflecting on local market knowledge, exploring off-radar locations and learning how the local economies of those areas function. As a consequence yields on secondary properties are expected to rise between 2014 and 2016, and outperform largely stable prime


yields by rewarding investors up to 10% yield at the end of the period (DTZ Research, 2013). Lenders in development finance also become more local, seeking certainty and security in knowing the demographics and economic dynamics of smaller regions.

2.2 Office Market 2.2.1 Trends There is a tangible need for new high quality space in the city as increasing number of occupiers with forthcoming lease renewals are looking to the market to find better places. A wave of leases renewed in the period of 2014-2017 will turn the market and narrowing available options to choose from even more.

Source: CBRE (2013

Strong levels of Grade A take up are diminishing stock in City Centre (GVA, 2013a); rental value expected to rise by 0.6% for 2013, 1.6% for 2014 and 2.5% by 2017 (CBRE, 2013).Vacancy rates are around 7.8%- 8% with continuing erosion of Grade A office space available; demand will filter through secondhand Grade A and Grade B. In the city centre available stock of good quality and well located premises are very limited, many of the available spaces are sub-standard especially in the Grade B sector (Cushman & Wakefield, 2013). Grade B means office buildings built in 1970s 1980s, lack of energy efficiency, high operational costs and not meeting with occupier expectations anymore (CEC, 2013b). Edinburgh is the 2nd city in the UK on the list of the cities with the most obsolete office space stock (LHS, 2013). The potential for high quality refurbishment in existing buildings is high (JLS, 2013a) as new occupiers are looking for quality space (KF, 2013a). 2.2.2 Take up GVA experienced (2013a) growing occupier confidence city centre quarterly take up compared to fiveyear average. On overall levels reports show that total available office space in Q3 is somewhere between 183000 m2 and 223.000m2 of which 68.000 m2 were taken up in Q1-Q3 (CBRE, 2013), in Q3 alone 24700 m2 were taken up by businesses, decreasing Grade A availability by 9-10% (Cushman &


Wakefield, 2013). Structure of office spaces taken up contained small scale offices on an average of 700-1000 m2. Typical deals were done by Retail and Leisure (23%); Technology & Telecommunications (13%); Business Services (8%); Media and Financial Services and Electronics (12%) occupiers. For example: PwC - 2.973 m2, BNY Mellon - 5.017 m2 (LHS, GVA, 2013a); Balance of supply, demand and take-up in this situation is that without significant new developments would be balanced in the case of Grade A only for 1.5 years, in total - Grade B and C included - for 3.5 years. 2.2.3 Market rents Market rents on the office subsector for Grade A offices are in Q3 of 2013 are estimated to be between 294 £/m2 (£27 psf) (GVA; KNIGHT FRANK 2013a) and 301-304 £/m2 (£28-29 psf) (CBRE; JLS Office 2013a). A bit ambitious estimation has been made by Cushman & Wakefield (2013) projecting an even higher 312 £/m2 in 2013 Q3. Comparable evidence (Appendix 2) shows that in the wider area of Argyle House transactions were on a slightly lower rental rate than this even in the case of new developments ranging 215- 275 £/m2 for Grade B and 300 - 345 £/m2 grade A spaces. 2.2.4 Market yields Average market yield on Grade A office is 6.00 % by all agencies, Grade B yields on transitionary or upcoming secondary locations such as Argyle House area are bearing risk premium placing yields at around 7.00-7.50%. Recent major office investment in Quartermile One was a net initial yield of 6.60%. Office sector is facing restructuring apart from prime offices in established CBD locations the new trend is the office space catering for small and medium sized occupiers taking – up units well below 3000m2. Transition zone locations with vibrant public places, attractive lifestyle options and socialising, night life and cultural potentials in cafes, open terraces, clubs are especially important for the creative industry and TMT sector (PwC-ULI, 2013a). Closeness to city centre, attractive destinations, cultural and creative users, P+R parking combined with excellent public transport connections, lifestyle choices and chic places are in most demand in the next 3-4 years to come(CEC, 2013a).

2.3 Retail 2.3.1 Trends Data show that economic recovery is partially driven by lower inflation, increased consumer confidence and spending - displaying retail sales figures growing in Q-o-Q (Colliers, 2013b). Economy has grown hand in hand with household expenditures and real household disposable income. Decline among retailers on the high street fell in the first six months of 2013 as well as the rate of store closures. Edinburgh city centre and the Grassmarket area witnessed a varied shopping and tourism originated footfall from 173.195 in December 2012 people passing to 593.529 in August 2013 (CEC, 2013a).


Retail supported by attractions and strong food & drink potentials resulted that the turnover in the area outperformed the rest of Scotland and dropped slightly (0.3%) compared to figures in 2012. 2.3.2 Market rents Local evidence shows that the Old Town and Grassmarket area fares much better however retail units for rent are on much smaller scale and demanded by individual specialist occupiers. On the other spectrum of the local retail structure the hugely popular food & drink premises (pubs, bars, cafés) pushed rental prices upward. Market evidence show that rental prices around Argyle House are ranging in £170 - £220 for second-hand B category and £260 - £439 for new, niche / specialist shop or food and drink units (Appendix 2) 2.3.3 Market Yields Knight Frank measured the retail market yields to be on an average 6.2% in the UK (2013b). Surveys conducted show that the main customer activities influencing retail development mixes were: “meet with friends” – 12%, “visitor attraction” 27%, “had a meal” 27% and shopping” 34%. The consequence is a shift in retail demand by marking the need for more affordable independent fashion design shops, non-chain pubs, cafes and restaurants. Demand for trading space seen retailers designing their stores to maximise trading on upper floors adopting an international trend of “Maisonretailing”. Neighbourhood and high street retail transforms as customers increasingly look for cost efficiency and to avoid car use and parking charges resulting changes in daily shopping patterns.

2.4 Hotel 2.4.1 Trends Hotel industry in the UK is doing well as distressed property prices, improved availability of funding resulted a huge 28% uplift in hotel transactions. There is a shortage in available hotel development sites given the strong competition for greenfield and brownfield development lands. Hotel operators are increasingly teaming up with large property growth funds in the form of Joint Ventures to manage risks while accessing potentially lucrative markets (PwC 2012b). Edinburgh remained one of the most popular destinations in the UK, witnessing rise in hotel income by 6.10% and increasing capital values by 4.80%. Gross operational profits were reported to be up by 11.1% and revenue figures up by 17.7% compared to a year back (JLS; Savills 2013b). 2.4.2 Hotel development scene in Edinburgh Hotel landscape is dominated by 3 and 4 star hotels (29% and 19%) respectively with another 24 current development in the pipeline. However only 8 are due for completion by the end of 2015, the rest


is either on hold or still unconfirmed. (PwC 2014b). Recent transactions show hotels with 77, 187 and 179 room changing owners in Q4 2012 and H1 2013 (Appendix 2). 2.4.3 Gross Operating Profit, Occupancy and Room Rates In Edinburgh occupancy levels varied between 79% at spring and 93% in peak season driven by festivals such as the Fringe attracting visitors around the world. In 2014 the Commonwealth Games will be the next big pull and a large increase in number of visitors expected. Occupancy figures and average daily room rates (ADR) were 78.3% and £67.41 in April, 91.7% and £ 96 in July, 91.3% £85.91 in September according the Essential Trend (CEC, 2013a) reflecting on the periodicity of the business. Business information in 2012 and the fact that profit, occupancy and ADR levels are rose suggest that in 2013 will be minimum: 80% occupancy, £87 ADR and 36% profit. 2.4.4 Market Yields Argyle House site area is a prime location for a new hotel, in fact one of the last available brownfield regeneration site which has the dimension and position in the city to accommodate such a development, therefore an average 6.0 % yield can be expected.

2.5 Residential Market 2.5.1 Trends Housing sector facing with limited availability of suitable development land in central Edinburgh and this could become a real issue over the next few years. Especially as Edinburgh City Centre is the 5 th most preferred location by buyers. Private residential developers’ response in Edinburgh has been very active at all levels so far in 2013. From the smaller 10- 50 unit, one-off flatted refurbishment to the larger 900+ unit development at Quartermile there is activity in all sectors. Transactions shoot upwards by 33.1% in July –September 2013 and 28.5% in April – June 2013 comparing to data in 2012 (RoS 2013). Overall annual transactions were up by 3.0% and price growth expectations show a steady 2.9% in the next three years till 2017 as housing stock in pipeline runs off. Demand to let or buy good quality flats in the narrower city centre is already strong (Knight Frank 2013c). 2.5.2 Private rented market rents Two bedroom flats are on the market on an average £732 - £751 /month, three bedroom properties for £1000 – £1050 /month. Argyle house site belongs to the very popular addresses (EH1, EH3 postcode) placing combined monthly rents for two & three bedroom flats on an average £946 /month (£11.352 year/unit). Annual rise of rents (3.0% and 2.1%), a good probability to let the flats within a month (68% and 53%) are very encouraging in general, let alone in the Argyle House site’s area where virtually zero new residential units are available.


2.5.3 Market yields Market yield of private rented developments were an average 5.0% in Edinburgh in Q1 2013 but yields are expected to be closer to a possible 6-9% yield range already (JLS 2013c). This expected to be around 7.0% in the area as this is not a clearly prime housing district and any development here would count as speculative, but its uniqueness and the relative lack of urban, city centre lifestyle homes give some certainty that it will “sell” – well.

3. Scheme proposal and development appraisals The proposed development has one clear advantage its unique location and transitionary position. In the case of the hotel and retail (especially food & drink) uses it is enhancing its potential to be economically viable: higher customer number, higher footfall can be expected meaning that development can maintain a relatively higher return. The residential factor also promising as there is an explicit housing shortage in Edinburgh in general and more so in the centre. However purchasing power of households and the necessary allowance for affordable housing holds back the possible return. The range of 2 and 3 bedroom flats are aimed to reach a much wider market of young couples and families. Affordable units are making it possible for the not so influent audience too preventing gentrification. Argyle House is an operating office base but considering that is almost empty at the moment might right not to announce it as prime location mostly because of the outdated building. Even though it is on the edge of Exchange district, very close to the Old Town and New Town, well served by public transport and is in walking distance of the most prominent parts of Edinburgh, new office development is risky and highly speculative which can be seen in the high 25% expected profit rate. Being targeted on TMT sector reliance on the new King Stable’s cultural quarter scheme is also increasing uncertainty to keep it in balance the more stable element (housing and hotel) will help. Rental levels and yields have to be considered in context of the location and the speculative feature of the redevelopment project. Office element: Reflecting on the fact that its attributes are very favourable, and new good quality, under 1000m2 Grade B spaces are in short, but success depending on other factors the higher end of the Grade B rent range is targeted – 275 £/m2 accompanied with a risk premium of 7.5% yield. Retail element: To be a tourist destination means that an attractive mix of local functions has to be built up, food and drink and specialist shopping retail – cafes, restaurants and independent designers


are especially good in this. Closeness of international tourist routes, the Grassmarket and the office buildings towards Lothian Road will bring customers in, the local office customers will be addition to this. Higher rents can be applied at around 260 £/m2 but lower yields as the area is more on the mental map as an “authentic” destination, therefore target is 6.2%. Hotel element: The location, the building, the potentially available amenities are very good from hotel perspective and while industry performs well competition is not strong as many of the projects planned are on hold. Occupancy levels, ADR and operational profit rates are the average of market evidence, chosen 6% yield rate shows an investment in premium location. Private rented residential element: Flats in the city centre traditionally do perform well, but decreasing purchasing power and lack of available credit result longer time windows to let and higher yields – 7% - to take on as risk premium. As there is almost equal number of 2 and 3 bedroom flats a combined average of monthly rent figure was set up at £11.352 / unit based on market evidence in the postcode area Affordable rented residential element: In housing developments in Edinburgh over 12 units, affordable homes must be provided on site, 25% of the total numbers of homes proposed. From the options available in the Developer Contributions & Affordable Housing (CEC; Planning Guidance), the Intermediate Rent, an unsubsidised form of Mid Market Rents is particularly attractive as it allows letting for the highest Local Housing Allowance (£138.4 /week for 2 bedroom and £184.62 /week for 3 bedroom flats in Edinburgh) and has to be provided either over the medium or long term. For the scheme purposes as there is almost equivalent number of 2 and 3 bedroom flats a combined average £700 /month affordable rent is taken into account. Cost elements: Higher professional fees (14%) regard the complexity and difficulty of delivering the project, higher site costs (12%) show that brownfield regeneration with significant open, public space involved are more costly. Purchaser’ costs, sale and letting fees were left on standard base. Demolition cost is based on the DTZ estimated £1.5 million figure. Building costs are based on BCIS data, in the case of retail, office and housing the “Housing with shops, offices, workshops and the like” and the “Offices with shops, bank, flats etc” mixed use figures were chosen from the higher upper quartile (1500 £/m2). Hotel building cost is extracted from upper quartile of the “Hotel/Conversion of existing building” line at 1390 £/m2. Development Contributions: These are additional elements adding up to development costs taken on by developer to provide sustainable development of the area and economic viability of the scheme. Many of them non-negotiable and counted on standard rates depending on use types and scales. Without contribution to the Tram development the figure of Transportation and Public Realm improvement is £736.500. Affordable housing contribution is already included as an individual element


into the development by choosing the Intermediate Rent tenure type outlined in CEC’s Developer Contribution and Affordable Housing guidance. 3.1 Residual Site Value: Based on appraisal and taking all factors into account an estimated £1.507.420 - SAY £1.500.000 residual site value is maximum available to buy the site.

4. Conclusions and Recommendations The aim of this report is to test the viability of the mixed use scheme outlined in the Group 12’s urban design brief. The scheme proposed to redevelop the Argyle House site by partially demolishing the existing office buildings and converting the rest to a 3 star hotel with 200 rooms. The new mixed use element contains 20 two bedroom and 23 three bedroom private rented and affordable flats, 2696 m2 office for small and medium sized TMT and creative industry occupiers and 2940 m2 retail (shop, cafe, restaurant) space. The scheme built upon the complementing effect of the new cultural quarter proposed by the brief on the King Stable’s transforming the area to a thriving tourist, entertainment and urban destination. New connection between Castle Terrace and King Stable’s Lane via the new King Stable’s steps will lead through an intimate public space surrounded by cafes and enhanced by street art and landscaping. The development appraisal based on market analysis recommends the commencement of the scheme only under the SAY maximum £ 1.500.000 net residual site value. Challenges and Solutions Although the net residual value is positive, it is possibly not a realistic price to offer a deal for the site. It is partially rooted in the loose timing, 48 months is too long while finance interest is clicking on construction coasts, even though first part of the scheme would be released after the 32 month to let. Probable 3 years should be better. High construction cost cannot be lowered without compromising the quality as it would result that targeted income is unreachable, therefore it couldn’t be the solution. Council may not agree to permit the lack of on-site parking spaces even though parking policy in centre allows this type of development. By looking at the numbers residential use may not be the best choice in the mix as it has the lowest generated income when it combined with affordable housing. On the other hand it contributes significantly to social sustainability of the area. Dependence on cultural development next door also can be disadvantage especially if it was delayed or cancelled. Solution can be the involvement of the present owner of Argyle House (even Council and the King Stable’s site can be considered) into the development and offering equities or setting up a joint venture to exploit opportunities while managing risk and keeping down costs.


5. References AVIVA Investors (2013) “Market Edge – Dearth of UK Finance Spells opportunity” [online]. Bank of England (2013) “Inflation Report”; 2013 November” [online]. Bank of England (2013) “Trends in Lending”; October 2013” [online]. CBRE (2013) “Edinburgh Office Quarterly Market Update Q3 2013” [online]. Citylets (2013) “Aberdeen Strikes Rental Riches – Quarterly Report”; Autumn 2013-12-13 [online]. City of Edinburgh Council (2013) “Essential Edinburgh – BID Market Intelligence”; Issue 33 [online]. City of Edinburgh Council (2013) “Office Demand in Edinburgh – Draft Report”; April 2013 [online]. City of Edinburgh Council (n.a.) Planning Guidance – Developer Contributions & Affordable Housing [online]. Colliers International (2013) “Property Pricing Survey” [online]. Colliers International (2013) “Research & Forecasting UK: Great Britain Retail”; 2013 Autumn [online]. Cushman & Wakefield (2013) “UK Regional Office Market Briefing Q3 2013” [online]. DTZ Research (2013) “Secondary Market Pricing – Secondary to outperform prime from 2014” [online]. GVA (2013) “The Big Nine – Regional Office Market Review” [online]. GVA (2013) Jerry Burton;” A Practical Retail Perspective”; Index Conference 2013 [online]. Hotstats (2013) “UK, Europe & EMEA Hotel Industry Report 2013” [online]. Jones Lang LaSalle (2013) “Edinburgh Office Market Profile Q2 2013” [online]. Jones Lang LaSalle (2013) “Hotel Intelligence UK”; October 2013 [online]. Jones Lang LaSalle (2013) “Residential Eye – Scotland’s Residential Development Market”; September 2013 [online]. Knight Frank (2013) “Edinburgh offices Market Update Q2 2013” [online]. Knight Frank (2013) “UK Market Outlook – Commercial property outlook review”; September 2013 [online]. Knight Frank (2012) “ The UK Regional Hotel Market Q4 2012”; October 2012 [online]. Knight Frank (2013) “Prime Scottish Property Index”; September 2013-12-13 [online]. Lambert Smith Hampton (2013) “Addressing Obsolescence – Office Market Review 2013” [online]. OECD (2013) “Economic Survey United Kingdom” [online]. PwC – ULI (2013) “Emerging Trends in Real Estate Europe 2013 – The Second Act: Optimism Returns” [online]. PwC (2013) “The right kind of growth – UK Hotels Forecast 2014” [online]. Registers of Scotland (2013) “Quarterly House Price Statistical Report” September 2013-12-13[online]. Savills (2013) “Commercial activity expands at fastest pace since March”; September 2013 [online]. The Scottish Government (2013) Creating Places - A policy statement on architecture and place for Scotland [online]. The Scottish Government (2010) Designing Places – A policy statement for Scotland [online]. The Scottish Government (2010) Designing Streets – A policy statement for Scotland [online].


6. APPENDIX 1 – SCHEME PLANS AND DESIGN Design Brief Masterplan

Hotel and Mixed use redevelopment scheme of Argyle House Site


The Mixed Use element

Impressions and Uses of Perimeter Zone

Impressions public space design of Inner Core

Impressions on Cafe (Food & Drink –Retail) uses of Inner Core


7. APPENDIX 2 – COMPARABLES OFFICE COMPARABLES Address

size m2

102 West Port

rent £/m2

quality

date of deal

570

£122,700

£215

B

30/07/2012

419

£90,220

£215

B

31/07/2012

391

£107,525

£275

B

2013

35

£12,000

£342

A

31/10/2013

1073

£288,750

£269

A

18/01/2013

316

£67,940

£215

B

2013

23 George IV Bridge 2 Lister Square 20 Castle Terrace

rent per annum

1 East Fountainbridge

Source: EGI.com

RETAIL COMPARABLES Address

size m2

rent per annum

rent £/m2

quality

date of deal

30-44 West Port

88

£15,000

£170

second-hand - B

11 West Port

79

£14,000

£177

10 Lady Lawson Str.

36

£8,000

£222

second-hand - B

91-97 Lauriston Place

21

£7,500

£357

New - A

81 Grassmarket

96

£25,000

£260

refurbished - B+

27/05/2013

25 George IV Bridge

200

£45,000

£225

refurbished - B

29/04/2013

21 George IV Bridge

148

£65,000

£439

New - A+

28/02/2013

1 Lochrin Square

126

£35,000

£278

refurbished - B+

01/11/2013

second-hand - B

01/06/2013 15/03/2013 01/07/2012 2013

Source: EGI.com

Hotel

Price (£million)

Rooms

Grade

Investor

Apex Waterloo Place

10

187

4 star

Americas

Travelodge Edinburgh West

7

179

2 star

Domestic

The Queensferry

3.5

77

3

Domestic

source: Knight Frank regional uk Hotel market (2012); JLS; Hotel Intelligence (2013)

Argyle House - mixed use development appraisal  

The appraisal is valuing the new development proposed in the design brief for the Argyle House site in Edinburgh. While it is concerned with...

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