Edinburgh’s Quartermile urban regeneration project has secured an £80 million package of support in what is believed to be one of the largest ever speculative office funding schemes in Scotland.
Property investor Moorfield, which bought the former hospital site from developer Gladedale Capital in a multi-million pound deal last year, said work on the first of two office buildings will begin this month, supporting up to 400 construction jobs.
Between them the two blocks will provide about 200,000 square feet of Grade A office space, making it the biggest speculative project since last year’s completion of Edinburgh City Council’s Atria development on Morrison Street.
Moorfield chief investment officer Charles Ferguson Davie said: “The level of investment is testimony to Quartermile’s continued momentum and also demonstrates the growing confidence in Edinburgh’s office and property market.”
Moorfield has secured the funds for the Quartermile scheme, on the site of the former Edinburgh Royal Infirmary, from M&G Real Estate, the investment arm of life and pensions group Prudential.
M&G Real Estate’s director of development, John Fyfield, said: “At a time when there is a real lack of Grade A office space in Edinburgh, the commitment to speculatively develop these buildings ensures they will be delivered into a market where there is little competition.”
Development at Quartermile largely ground to a halt in the property crash of 2008-9, but once finished the scheme will feature 900 flats, of which more than 560 have been sold. The project will also include more than 323,000sq ft of offices and 108,000sq ft of shops and leisure space, and is expected to be completed in 2018.
The first of the office blocks being built, dubbed Quartermile 4, will have 130,600sq ft of space over seven floors and is scheduled to be finished in early 2016. Work will then begin on the six-storey Quartermile 3, which will cover 72,911sq ft.
The two buildings will provide space for more than 2,000 people and Quartermile managing director Paul Curran said they were already attracting interest from prospective occupiers keen to join the likes of legal heavyweight Maclay Murray & Spens and flight search firm Skyscanner at the site.
Curran added: “The deal is excellent news for both Quartermile and Edinburgh. We are already seeing strong occupational interest and are working with our agents to secure lettings.”
The Quartermile site was 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. Gladedale – owned by Dunfermline-based housebuilder Avant Homes – bought out Taylor Woodrow’s 50 per cent stake in 2005 in a deal thought to be worth up to £200m, while Kilmartin fell into administration in 2010.
As well as residential and retail units, including Looking Glass Books, the scheme is home to a number of eateries such as Peter’s Yard and Starbucks. An existing Marriott Residence Inn will eventually be joined by another hotel on the site.