H e r i o t - W a t t U n i v e r s i t y

S c h o o l o f B u i l t

E n v i r o n m e n t

S u s t a i n a b l e D e s i g n &

D e v e l o p m e n t

R o l a n d L á p o s i

2 0 1 3 . 1 2 . 1 3 .

Summary of 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 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.

Argyle House -Mixed Use Development Appraisal

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 bar-

wing 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 five-

year 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 “Maison-

retailing”. 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 rent per annum rent £/m2 quality date of deal

102 West Port 570 £122,700 £215 B 30/07/2012

419 £90,220 £215 B 31/07/2012

23 George IV Bridge 391 £107,525 £275 B 2013

2 Lister Square 35 £12,000 £342 A 31/10/2013

20 Castle Terrace 1073 £288,750 £269 A 18/01/2013

1 East Fountainbridge 316 £67,940 £215 B 2013

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 01/06/2013

11 West Port 79 £14,000 £177 second-hand - B 15/03/2013

10 Lady Lawson Str. 36 £8,000 £222 second-hand - B 01/07/2012

91-97 Lauriston Place 21 £7,500 £357 New - A 2013

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

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)