DHP to put Odeon site up for sale screening

Published on Monday 2 August 2010 16:14

IN AN attempt to draw the curtain on the controversy surrounding the former Odeon cinema building in Edinburgh, developer Duddingston House Properties is putting it on the market for a three-month period at the end of the summer.

The intention is to provide another developer or other potential owner an opportunity to purchase the building under its current "listed" status, which has prevented DHP from achieving its aim of demolishing the auditorium to build a hotel.

DHP bought the former cinema seven years ago to be developed as a night club venue, but this was changed to a boutique hotel after it became clear City of Edinburgh Council would not authorise a late licence in this largely residential area.

Although the planned hotel will preserve the frontage and much of the former cinema foyer, the scheme will mean demolishing the "back area", including an auditorium dating from 1930 and said to be rare for its time.

DHP has full planning consent from the council, while local heritage body the Cockburn Society has not objected, but the scheme has been stalled by the refusal of Historic Scotland to delist the building. DHP chief executive Bruce Hare said that despite having put forward carious ideas that would retain the auditorium, he had not received a legal offer to buy the site, which was independently valued at 2.9 million in December. He continued: "Nevertheless, we have decided to market it high and wide for a three-month period to open up the opportunity to as many parties as possible."

If a buyer is still not found, DHP will reapply for a delisting consent, although Mr Hare emphasised that he did not want to be too critical of Historic Scotland. "Solutions don't happen by having fights with people, but there has to be pragmatism by all parties," he said.

"Historic Scotland has a very important role to play and I suppose the heritage dimension is what makes Edinburgh such an attractive city as a place to live and work."

Meanwhile, Mr Hare has announced the start of work on the restoration of DHP's other prize former cinematic holding - the Odeon on Renfield Street, Glasgow. Being more centrally-situated and much larger than its Edinburgh counterpart, (it occupies a half-block), this project has not been mired in the same level of controversy.

However, environmental and heritage lobbies have expressed concern about the down-at-heel condition of the iconic, art deco frontage which, when it opened in 1934, according to Scottish cinema historian Bruce Peter "must have looked to the people of Glasgow as if it had landed from outer space".

DHP's scheme is called The Paramount Building, a testament to the original name of the cinema, which was one of an elite British chain built for the Hollywood film company of the same name. Now the curved corner front area - which extends to more than 22,000sq ft and is characterised by its "tail fin" architecture - could be ready for occupation by a leisure operator by as early as the spring.

More time will, however, be necessary to complete the main part of the scheme, which will be given over to 150,000sq ft of grade A business space, with floorplates of up to 20,000sq ft.

According to Mr Hare, an office scheme of this size and quality would be impossible to pre-fund in the current environment. "Even if you had the thing 50 per cent pre-let, I don't think a bank would entertain you," he said. Therefore his intention is to carry out detailed design work alongside a dedicated occupier, co-operating not just on the features of the building but also perhaps on the way it is to be financed and value added.

"New thinking is essential," he said. "I don't know if we will ever return to the earlier, familiar ways of funding and developing large-scale offices."

Still, he expresses confidence that such an arrangement may not be too far off. "Take-up of quality office space in Glasgow city centre has been accelerating rapidly, there are requirements for over 400,000sq ft and rental incentives are down to two years on 15-year leases, yet there is nothing new of any appreciable size coming on stream."

The DHP portfolio contains just one other scheme - three years ago it had more than 70 stretching from Aberdeen to Plymouth. The decision to disinvest was made in 2007 following a lunch at DHP's headquarters in Edinburgh, the Paladin-style Duddingston House. Guest Ian Rushbrook, the managing director of Personal Assets Trust (who died suddenly the following year), warned that a global crash was on the cards. "Ian wasn't able to say exactly how the crash would happen and who all it would involve, but his argument was so well put that it made us think about getting out of property," Mr Hare said.

So, apart from two former picture houses, the only remaining holding of any appreciable size is an office building on Torphichen Street, an unfashionable secondary thoroughfare in Edinburgh yet strategically located between The Exchange and Haymarket station.

Earlier plans for its metamorphosis - which included a striking new frontage and extending the floorspace from 23,500sq ft to 40,000 sq ft - have had to be put on hold. Still, a modest refurbishment was enacted and this has been rewarded with the recent letting of the 3,500sq ft top floor to Optimised Environments, an urban design and landscape company.

"When we happened to bump into one another one morning, I persuaded him to take a look at Torphichen Street," said Mr Hare. "I said to him, ‘if you take this space, I will match any deal in the central area'." Consequently, he secured a new tenant on a five-year lease at 15 a sq ft.

Finally, despite such a "hands on" approach to lettings, Mr Hare does also use agents - in his case GVA Grimley, with CBRE having recently been taken on jointly on The Paramount Building, and JLL also acting on Torphichen Street.