erskine house - invest edinburgh · outstanding re-development opportunity erskine house, edinburgh...

OUTSTANDING RE-DEVELOPMENT OPPORTUNITY ERSKINE HOUSE, EDINBURGH68 – 73 QUEEN ST, EH2 4NN

FOR SALE

ACQUISITION RATIONALE

FURTHER INFORMATION Chris Dougray E: [email protected] T: 07808 479215 David Smith E: [email protected] T: 07718 805922 www.dougraysmith.com

A rarely available freehold VP asset in Edinburgh’s city centre

Stripped out and ready for immediate development

Previous office use: Edinburgh office market the most supply/demand imbalanced city in the UK

Sold with the benefit of planning consent for 180 key aparthotel

Located adjacent to prime Edinburgh residential sector - the New Town

LOCATION

Erskine House is situated in the heart of the Golden Rectangle - Edinburgh’s traditional and long established commercial centre.

The property itself occupies a high profile location at the western end of Queen Street, in close proximity to Charlotte Square, which itself has seen significant investment in the last 36 months, and on the fringe of the New Town. The location provides excellent public transport links with both Waverley and Haymarket railway stations being within walking distance. There are multiple bus routes and the tram all within a short walk of the property. George Street and Princes Street- the city’s principal shopping streets- are both located close by. There is an excellent range of restaurants, bars and overall amenity in the immediate vicinity.


CROWN COPYRIGHT © - Produced from REGISTERS DIRECT on at with the authority of Ordnance Survey pursuant to section 47 of the Copyright, Designs and PatentsAct 1988. Unless that act provides a relevant exception to copyright, the copy must not be copied without the prior permission of the copyright owner. This copy has no evidential status. OS Licence No.

15/02/2016 16:53

100041182.

DESCRIPTION

Areas Sq M Sq Ft

Basement 1881 20,288

Ground 1824 19,670

First * 1591 17,160

Second 1558 16,800

Third 1555 16,772

Fourth 1503 16,210

Fifth 968 10,440

10,880 117,340

*excludes two light well voids

www.dougraysmith.com

Erskine provides flexible accommodation overlower ground, ground and five upper floors.There are 49 car parking spaces.

The building has been fully stripped out and is now ready for immediate redevelopment.


EDINBURGH - SCOTLAND’S CAPITALTHE AWARD WINNING CITY

1st FDI Strategy - Global Cities of the Future, Financial Times fDi Magazine (2016/17)

Entrepreneurial City of the Year - Great British Entrepreneur Awards (2016)

6th Most Reputable City in the World - City RepTrak, Reputation Institute (2016)

‘Best Mid-sized City’, Business Friendliness - Financial Times fDi Magazine (2016/17)

Invest Edinburgh - Best in FDI (Europe) - Global Business Awards, The European magazine (2016/17)

Best European City for Technology Firms to Locate - European Business Magazine (2016/17)

One of the most sustainable cities on Earth (13th) - Sustainable Cities Index, Arcadis (2016)

Top UK city to invest in student accommodation - Real Estate Agent, Chestertons (2016)

Most attractive British location for commercial property investment outside London – Morton Fraser (2016)

Highest in UK – 55% of the Edinburgh workforce has a degree level qualification or equivalent (2016)

‘Best British City’ Telegraph Travel Awards (2016)

UK’s top tourist spot - Pegasus Marine Finance (2016)

11th Friendliest city in the World – Conde Nast Traveller (2016)

UK’s largest ‘Gigabit City’ - Edinburgh is the UK’s largest Gigabit City (2016)

Culture capital of the UK - Daily Record’s analysis of 10 of the UK’s major cities (2016)

2nd Highest density of millionaires in UK, 16th in Europe - WealthInsight and Spears magazine (2016)

Easiest city in the UK to travel within - ESP Group’s easy travel index (2016)

1st in UK for Green Flag Parks - Edinburgh has more green flag parks than any other major UK city (2016)

‘Best place to live in the UK’ – Quality of Life Index, USwitch (2015)

Britain’s Brainiest City, BBC (2015)

1st in Scotland – Recycling Waste (April 2013 to March 2015)

2nd in Top 10 Travellers’ Choice destinations in the UK – The STYLIST (2015)

One of world’s top ten cities to visit - Wanderlust Reader’s Travel Awards, (2015)

4th most beautiful city in the world - Rough Guide readers (2015)

3rd safest city in the world - Post Office Travel Insurance (2015)

Best UK destination outside London - TripAdvisor reviewers (2015)

Best UK city - Over 50’s Standard of Living Index, ThisIsMoney.co.uk (2015)

UK’s second favourite city – Conde Nast Traveller magazine (2015)

Best city in western and central Europe – PWC report on on-line travel reviews including TripAdvisor (2015)

FDI city of the Year - The European magazine (2015)

‘Best Mid-sized City of the Future’ - Financial Times fDi Magazine (2014/15)

‘Best Mid-sized European City: Foreign Direct Investment Strategy’ - Financial Times fDi Magazine (2014/15)

‘Best British City’ - Telegraph Travel Awards (2014)

‘Airport of the Year’ - Scottish Transport Awards (2014)

One of the ‘Top Ten Cities to Visit’ - Wanderlust Travel Awards (2014)

‘UK’s safest destination’ - YouGov (2014)

‘Best Place to Live in the UK’ - YouGov (2013)

‘Best UK destination outside London’

TripAdvisor reviewers (2015)


Edinburgh has been popular with globally based investors for decades. As a result, there’s an array of international companies across various sectors to complement those who have grown in the city.

We note on this page a selection of the companies who have chosen Edinburgh. Between them they employ thousands of people in highly-skilled roles. The population of Edinburgh is estimated at 475,000, which was an increase of 28,000 on the figure from 2001 which stood at 448,600. There is a population of 1.6million in the wider Edinburgh city region.

• The city has the second highest Gross Value Added (GVA) per resident (behind London) in major UK cities, with the average being £34,178 per resident

• The city has the lowest percentage of total working age residents claiming Jobseeker’s Allowance of major UK cities at 3.2% as of December 2012

• Edinburgh is second only to London in average gross annual earnings per resident in Major UK cities, with an average salary of £27,800

• Edinburgh is the most prosperous city in regional UK and it has a workforce recognised as one of the most educated in the UK

Edinburgh is one of the fastest growing and most productive cities in the UK. It is the most prosperous city outside London, but offers significant-ly lower labour and property costs than London and the south-east. Unemployment in the city has been consistently low, and the economic activity rate is higher than Scotland as a whole. The city regularly ranks highly for investment attractiveness, financial services competitiveness, commerce and conference hosting while productivity per head at £30,620 outperforms the Scottish and UK average.

WORKERS IN EDINBURGH (BY OCCUPATION) 2012KEEPING

GOOD COMPANY

TOURISM & DEMAND DRIVERS

Today, tourists continue to enjoy Edinburgh’s past and present landmarks. It is the world’s most famous arts festival city, the world’s first City of Literature (awarded by UNESCO in 2004) and home to the iconic Edinburgh Castle, the Scottish Parliament and the Palace of Holyroodhouse – the official Scottish residence of the Queen. According to VisitScotland, eleven of the top twenty visited attractions in Scotland are located in the Edinburgh City Region. The area is also home to one of Scotland’s five UNESCO World Heritage Sites – a completely unique layout, the medieval Old Town and Georgian New Town of Edinburgh are recognised as a site of international importance.

THE WORLD’S FESTIVAL CAPITALEdinburgh is the world’s festival capital, with 12 international festivals and a host of other major events throughout the year. They include the Edinburgh International Festival, Edinburgh International Science Festival, International Film Festival, International Book Festival, the Edinburgh Military Tattoo, Edinburgh’s Christmas and Hogmanay and the Edinburgh Festival Fringe, the largest arts festival in the world.

The city’s festivals generate approximately £250 million to the local city economy.

Discover more about Edinburgh’s International Festivals.

International conferences & eventsEdinburgh is the UK’s most favoured city outside London for holding international conferences and the sector is estimated to generate around £300 million a year for the city region.

Business tourism continues to be a growing market for the Scottish Capital. Facilities such as the Edinburgh International Conference Centre (EICC), the Assembly Rooms and the Usher Hall have all recently gone through upgrades totalling around £60 million in order to accommodate the growth in this thriving market.

Discover more about Edinburgh’s Business Tourism Sector.

INSPIRING ENVIRONMENTContinued major investment in Edinburgh’s tourism and cultural infrastructure is enhancing the city’s international reputation as a tourism capital.

Projects include the £46 million expansion of the National Museums of Scotland, the £18 million refurbishment of the National Portrait Gallery, the National Galleries of Scotland were also recently renovated and extended in a flagship £30 million project.

CITY COLLABORATIONThe Edinburgh Tourism Industry is collaborating through the Edinburgh Tourism Action Group (ETAG) whose aims are to:

• 1. Increase the number of visits to the city by a third.

• 2. Increase the average spending of visitors to the city by 10% (at 2010 prices)

• 3. To reduce seasonality across the sector.

FINANCIAL SERVICESEdinburgh is the UK’s second largest financial centre, a major European centre for asset management and asset servicing and home to the Headquarters of the UK Green Investment Bank.

GLOBAL FINANCIAL CENTREEdinburgh is one of the world’s top fund management hubs and a major European centre for asset servicing. More than half of the world’s top 20 financial organisations have substantial operations in Scotland, with a critical mass of activity in and around Edinburgh. The financial services sector of Edinburgh is extremely diverse, and the city has critical mass in banking, life insurance and pensions, asset servicing and investment management. (More than 90% of all Scottish fund managers are based in the city region). It also has vibrant corporate finance, brokerage and professional services sectors.

The city employs around 35,000 people in financial services and is home to two of the world’s 150 top financial services companies as ranked by Forbes.

Edinburgh is a major tourism centre in the UK and gateway to the rest of Scotland. Around 4 million visitors a year inject £1.32 billion into the local economy. Scotland’s Inspiring Capital is the UK’s favourite domestic holiday alternative to London and has a multiple award-winningreputation as one of the most attractive destinations in the world, with an ideal mix of shopping, culture, music, heritage and leisure facilities.



TECHNOLOGY & SOFTWAREEdinburgh is home to world-class tech talent and leading tech companies, including two ‘unicorns’ - Skyscanner and Fanduel.Edinburgh tech scene in a nutshell:

• Edinburgh has one of the highest concentrations of people working in tech in the UK with 17,136 people employed in digital companies

• Key sub sectors are EdTech, FinTech, and software development (Source: Tech Nation

• The University of Edinburgh’s School of Informatics has produced more world-leading and internationally excellent research than any other university in the UK (Source: REF 2014 assessment for computer science and informatics)

• There is a strong tech community. Edinburgh tech businesses are more likely to seek support from other members of their community than in any other cluster in the UK (Source: Tech Nation)

• All the factors that tech companies need to be successful can be found in the city

CONNECTED EDINBURGHEdinburgh is globally connected- international flights routes include Doha, Abu Dhabi, Philadelphia, Chicago, Instanbul and Toronto. In 2015 Edinburg Airport handled 11.13 million passengers, 950,000 more than in 2014. The airport has begun a £150million five year expansion.

Edinburgh Airport is Scotlands largest airport and fifth largest in the UK by passenger movements, with 40+ carriers serving more than 100 destinations.

Edinburgh Trams began operating in May 2014 connecting Edinburgh Airport to the city centre. In their first year the trams carried nearly five million passengers.

At the Haymarket inter modal transport hub trams connect to national rail links. Haymarket station has recently completed a substantial renovation as has Waverley Station ( at a cost of £295M) which will also see two new platforms being added to accommodate larger London bound trains; a £25M investment by Network Rail. Also underway is a new £35M transport interchange at Gogar- this will enable an efficient interchange with the Trams for onward access to the airport.

One of Scotland’s largest ever infrastructure projects, the new Forth Replacement Crossing, is currently under construction, with an estimated final cost of £1.4 billion.

AT THE CUTTING EDGE

Erskine House is a rare opportunity to acquire a substantial building and plot within Edinburgh City Centre and in particular it’s New Town.

The area is dominated by Listed Buildings and the property lies within the City’s prestigious UNESCO’s World Heritage Site designated in 1995 making large floorplate buildings extremely rare.

The surrounding area is of mixed use with some of the city’s highest value office space at Charlotte Square, high quality residential in the New Town, retail and leisure at George Street and hotels such as the Roxburgh and Waldorf Astoria within a short walk. The building’s most recent use was as an office building last refurbished in the 1980’s.The current owner has stripped out the building to ready it for development.

Planning consent was granted in August 2015 for change of use from offices to a Aparthotel and Restaurant (Application Number 15/01855/FUL) providing some 180 rooms. The building is north facing and has a concrete frame with floors of up to 19,670 sq ft GIA. It offers the opportunity for redevelopment for office, hotel or residential use with the option of ground floor active retail/leisure uses. There is substantial demonstrable demand for all of these uses in Edinburgh city centre with limited supply. The building currently offers basement, ground and 5 upper floors and there is the option of adding up to 2 additional floors onto the current roof level (subject to the appropriate statutory consents). Interested parties are advised to contact Edinburgh City Council to discuss their exact proposals.

DEVELOPMENT POTENTIAL


Typical upper floor plan as existing

Consented scheme for aparthotel

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Date Scale @ A1

Drawn By Checked By

Drawing No. Rev

- This drawing is copyright, reserved and remains the property ofFletcher Joseph Architects.- All levels and dimensions are to be checked on site by thecontractor prior to fabrication, and any discrepancies must bereported immediately to the Architect.- All dimensions are to be read off this drawing and NOT scaled.- All work to be executed in strict accordance with the by-lawsand regulations of the local authorities.- All work to conform to applicable codes of the BritishStandards.- Where indicated/required, all drawings are to be read inconjunction with all other documents issued by Fletcher Josephand/or other professions.

Title

Last Revision

Revised By

General Notes:

Rev

FLETCHER JOSEPH ASSOCIATES

5 Millar Place ● Edinburgh ● EH10 5HJ

T: 0131 4475000F: 0131 4469958

E: [email protected]: www.fletcherjoseph.com

Date Db Notes

AM

ERSKINE HOUSE

68-73 QUEEN STREET, EDINBURGH

REF:ERSKINE:180/19/2

EXISTING THIRD FLOOR

POST STRIP OUT

17/06/2016 1:100 @ A1

AM

15671-10-005 A

GA Third FloorThird Floor level

01- Scale 1:100 @ A1

A 17/06/2016 AM Turned to post strip out existing.

NOTE:POST STRIP OUT SURVEY HAS NOT BEENCARRIED OUT AND LAYOUTS SHOULD BETREATED AS INDICATIVE ONLY.

EDINBURGH HOTEL MARKET

There are currently (*) 206 hotels in Edinburgh providing over 13,800 bedrooms. Of these 9.0% are hostels, 17.0% are serviced apartments, 17.0% are budget hotels, 8.0% are classed as 2-Star, 24.0% as 3-Star, 21.0% as 4-Star and 4.0% as 5-Star.

Since 2012 there have been 30 new hotel openings increasing the bedroom stock by 2,627. Of these 69.0% of new bedrooms have been in the budget sector.

Edinburgh has enjoyed robust demand over the past few years, recording average occupancy levels at 80.0% for 2013 and 2014, rising to 81.0% in 2015. Statistics for the year to date November 2016 suggest an occupancy of 82.0% which compared with the Scotland and UK Regional average occupancy of 76.0% shows a strong performance.

The latest STR data confirms that the Edinburgh hotel market has shown continued improving performance in the 12 months to September 2016.

12 Months 12 Months to Sep 2016 to Sep 2015

ADR £125.17 £121.04

Occ 81.2% 78.4%

RevPAR £101.58 £94.95

The key demand drivers for Edinburgh hotels are from both the corporate and Leisure sectors. Edinburgh is the headquarters for major financial institutions including the Royal Bank of Scotland, Lloyds Banking Group and Standard Life. Other major companies located in the city include PWC, Blackrock and Scottish Widows as well as fast growing tech companies such as Skyscanner and BskyB. It is a recognised conferencing destination and the Edinburgh International Conference Centre (EICC) was voted “Best Conference Venue for over 900 Delegates” at the 2016 Conference Awards, ahead of ExCel London and the Abu Dhabi National Exhibition Centre.

Leisure demand is driven by Edinburgh’s popularity as an international tourist destination. There are numerous cultural and historical attractions such as Edinburgh Castle, The National Galleries of Scotland, Royal Yacht Britannia, St Giles Cathedral and Edinburgh Zoo. There is extensive existing retail provision which will be further enhanced with a major £1.2 billion redevelopment of the St. James shopping centre. In addition, there are 12 major festivals held in the city including Edinburgh International Festival, the Fringe Festival, Edinburgh International Book Festival and Hogmanay, all of which contribute to year round demand for hotel accommodation.

*AM PM data base

Edinburgh is the UK’s top regional hotel and leisure destination.

EDINBURGH OFFICE MARKET

Demand for office accommodation during 2016 was in the main focused in central Edinburgh and take-up in the central area represented c.75% of total take-up for the city and is representative of continued demand for central area offices coupled with reducing levels of supply in the city centre.

New Grade A availability within the City Centre has fallen to zero.

The Grade B office market has reduced significantly to c 200,000 sq ft representing a vacancy rate of 4%. This is a result of a combination of significant take up in this sector, little Grade B development or refurbishment, and the change of use of c. 950,000 sq ft of Grade B offices to other uses in the last two years.

Headline rents in Edinburgh have reached £32.50 per sq ft and coupled with strong demand and rapidly diminishing supply, the Edinburgh office market is very well positioned for rental growth, with current estimates of headline rentals for prime space averaging £34 per sq ft.

DEVELOPMENT PIPELINE AND RENTAL GROWTH

Only 1 speculative development is due to complete this year, some 73,000 sq ft at Quartermile 3.

SUMMARY

• The greatest supply/demand imbalance of any UK city

• Identifiable lease events occurring over the next 3 years

• Strong rental growth anticipated

• Clearly identifiable development first mover advantage


Over the course of the last 12 months the Edinburgh office market has benefited from robust levels of occupier demand leading to total take-up across the city during 2016 of c 750,000 sq ft. This figure is in excess of the five and ten year averages both of which are approximately 730,000 sq ft. These levels of take-up are representative of a strong and diverse city economy and look to continue into the year ahead.

EDINBURGH RESIDENTIAL MARKET

OVERALL EDINBURGH MARKETAverage prices in Edinburgh have proven to be robust and remained consistently above the wider national averages. Prices in the city peaked in Q1 2015 due to the forestalling effect caused by the introduction of the LBTT rates in Scotland. Since then, prices have returned to trend and the average for Q3 2016 was £241,798, over £70,000 above the national figure of £170,309.

Market turnover in Edinburgh has followed a similar trend to transaction levels, with recovery becoming more pronounced in recent years, largely in line with the national pattern.

See Figure 1.

EDINBURGH PRIME MARKET (SALES OVER £500,000)Since the middle of 2014, Edinburgh prime transactions levels have tended to sit between 150 and 250 per quarter. These levels are markedly better than those seen in the years 2009-2013.

Despite fluctuating levels of sales, Edinburgh prime average house prices have been largely stable since 2006. However, from the 2009 peak figure of £854,631, prices fell below £700,000 for the first time since 2006 in Q3 2015 and then again in Q3 2016. This may partly simply reflect the type of property coming to the market rather than the price of prime property falling. Market turnover in the Edinburgh Prime market has largely followed a similar pattern to transaction levels.

However, the recent fall in average prices has led turnover levels to fall to early 2015 levels.

See Figure 2.

However, strong demand and still relatively weak supply conditions seem likely to raise average prices in forthcoming years.The Edinburgh prime market attracts a wide range of buyers including professionals, downsizers, second home owners, overseas buyers and investors. Developments that can tap into all of these sources of demand, such as Quartermile, perform particularly well, with prices well in excess of £500 per sq ft. There remains a solid demand for quality prime family homes and for well-designed, niche product such as 53-57 Queen Street and 40-44 Drumsheugh Gardens, where prices for apartments averaged £775,000 (£435 per sq ft). Given levels of demand prime product should continue to perform well in forthcoming years.

SUMMARY• The post-recession recovery in transaction

levels in Edinburgh has been similar to the recovery in Scotland as a whole. Transactions in Edinburgh peaked at almost 5,000 in Q3 2006 before slumping to just 1,158 in Q1 2009. In Q3 2016, there were 3,334 sales in Edinburgh, down 3% on Q3 2015.

• Average prices in Edinburgh are comfortably above the Scottish figures and have been rising consistently across the last 10 years. Prices in Q3 2016 averaged £241,798, up 6% on the previous year.

• Turnover levels have followed a similar pattern to transactions in both Edinburgh and Scotland as a whole, although Edinburgh has had the stronger recovery.

Figure 1

2006-2016 2006-2016 2006-2016

Figure 2

Research statistics provided by Dr John Boyle, director for Research at Rettie and Co.

“DougraySmith Ltd for themselves and for the vendors whose agents they are give notice that 1) the particulars are set out as a general outline only for the guidance of intended purchasers or lessees and do not constitute, nor constitute part of an offer or contract ; 2) all descriptions, reference to condition and necessary permission for use and occupation, and other details are given without responsibility and any intending purchasers or tenants should not rely on them as statements or representations of fact but must satisfy themselves by inspection or otherwise as to the accuracy of each of them and are advised to do so ; 3) no person in the employment of DougraySmith has any authority to give representation or warranty whatever in relation to this property ; 4) all prices, rents and premiums are quoted exclusive of VAT at current rate”. Published January 2017.

FURTHER INFORMATION

Chris Dougray E: [email protected] T: 07808 479215 David Smith E: [email protected] T: 07718 805922 www.dougraysmith.com

PRICING

Please contact the sole agents for pricing details.

VATThe property is elected for VAT.

VIEWINGS

Access to view the building can be made available upon request to the sole agents

DATA ROOM

Access to a data room containing detailed technical and legal information can be made available to seriously interested parties.

EPC

An Energy Performance Certificate is available on request.

ERSKINE HOUSE THE MOST EXCITING RE-DEVELOPMENT OPPORTUNITY IN SCOTLAND

erskine house - invest edinburgh · outstanding re-development opportunity erskine house, edinburgh...

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