AN £80 million deal has been signed to build two major office blocks as part of the completion of the massive Quartermile development on the site of the old Royal Infirmary.
It is believed to be one of the largest speculative office funding deals ever struck in Scotland. The two buildings will ultimately provide office space for over 2000 people and will complete the office component at the site.
The agreement, involving Moorfield Real Estate, which owns Quartermile, and M&G Real Estate, the investment arm of insurer Prudential plc, will be the first speculative Grade A office development in the city centre for several years. It is expected to create between 300 and 400 construction jobs during the build period.
City council economy convener Frank Ross hailed the deal as great news for the city.
He said: “Attracting new businesses to Edinburgh is important if we are to ensure that Scotland’s Capital remains the most prosperous UK city outside London.
“This is a very exciting time for investment in the Capital and the speculative development of this Grade A office space at the Quartermile is a vote of confidence in our city economy. It will also provide jobs for the construction industry and help support more trainees and apprenticeships.
“The fact that this office space is being built speculatively, without a pre-agreed tenant, is a great vote of confidence for the Edinburgh economy. It’s well known that there’s a big demand for A-grade office space bubbling away beneath the surface that will come through in 2015/16, and I think the developers are ahead of the curve and are building at exactly the right time.”
The developers said construction on the seven-storey Quartermile 4 building would start in July this year, with completion due in early 2016, providing 130,600 sq ft of office space, including 12,490 sq ft of retail. Development of the six-storey 72,991 sq ft Quartermile 3 office building would follow at a later date.
The residential development at Quertermile is continuing and the whole expected to be complete by 2018.
The most recent flats to be finished were released for sale in April.
Quartermile was masterplanned by architect Foster and Partners. The development integrates 18th century buildings with new-build additions and it has established itself as one of Edinburgh’s most desirable residential and business locations.
Apartment prices on the development range from £190,000 to £1.8 million.
High-profile business occupiers include IBM, Investec and flight search business Skyscanner.
Once complete, Quartermile will include more than 900 apartments – 500 of which have already been built – a total of 30,000 square metres of office accommodation, 10,000 square metres of retail and leisure space and seven acres of open landscaping.
Quartermile managing director Paul Curran hailed the importance of the latest deal. He said: “The deal is excellent news for both Quartermile and Edinburgh.
“Construction of Quartermile 4 will commence in July this year making it the first speculative Grade A office development to be undertaken in the city for a number of years. We are already seeing strong occupational interest and are working with our agents to secure lettings.
Charles Ferguson Davie, chief investment officer at Moorfield Group, said the level of investment involved in the deal demonstrated a growing confidence in Edinburgh’s office and property market. He said: “Quartermile 3 and 4 will provide much needed Grade A office space that will undoubtedly contribute to the city’s ongoing economic development.”
Rising from a property slump
Sold by the Lothian University Hospitals Trust in 2001 to a joint venture between Bank of Scotland, Taylor Woodrow and Kilmartin Property Group for about £35m – development largely ground to a halt in the property crash of 2008. Gladedale – owned by Dunfermline-based housebuilder Avant Homes – bought out Taylor Woodrow’s 50 per cent stake in 2005 in a deal worth up to £200m, while Kilmartin fell into administration in 2010. Property investor Moorfield bought the former hospital site from Gladedale last year.