CAPITAL gains are off to a flying start with £105m deal to sell Atria building, writes Gavin Barrie
My new role as economy convener for the City of Edinburgh Council got off to a flying start in March as around the same time the council announced the sale of Atria, our award winning grade A office development, to Deka Immobilien, a global real estate investment company based in Germany, for £105 million.
The sale is a perfect example of successful financial forward planning and demonstrates real innovation to fund the city centre development. The council identified the need for more Grade A office space in the city centre and developed a funding package that also enabled us to cross-subsidise the cost of an expansion to the Edinburgh International Conference Centre (EICC).
The fact that we have been able, once more, to attract investment into Edinburgh from a major overseas real estate company is testament to the quality of the building and its occupiers.
Our plan was always to sell Atria once the development was completed and the economic conditions were right to achieve the best possible return for the council’s investment and I believe we have achieved this.
Edinburgh’s ability to attract major investment is considerable at the moment. The council is also facilitating a new funding model with the Scottish Government, which has unlocked the £850m Edinburgh St James development
Around £61.4m is required to improve local infrastructure and public space in the area for this major regeneration scheme and this is being funded through the innovative “growth accelerator model” (GAM). This mechanism will enable a combination of public and private sector investment that can then be offset by increased business rate receipts and overall gains to the economy. It will also help deliver training support and employment opportunities for the long-term unemployed.
Edinburgh St James is set to transform the east end of Princes Street and is being delivered by TIAA Henderson Real Estate. Alongside Edinburgh St James, the Registers is being delivered by the Chris Stewart Group, combining more than 15,000sq ft of restaurant and bar space with 61,000sq ft of grade A office accommodation and serviced apartments.
It was very welcome news when the Chancellor George Osborne announced in March the start of negotiations on a city region deal for Edinburgh and south-east Scotland.
This is a mechanism for accelerating growth through investment in housing, innovation, skills and infrastructure. This will create a step change in economic performance, increase productivity and tackle inequality and deprivation across the city region.
On another note which relates directly to investment in Edinburgh, other evidence to show the strength of our economy is that unemployment remains extremely low and the Jobseeker’s Allowance claimant rate is currently at 1.1 per cent, an all time low.
The technology cluster in the capital is also maintaining its momentum and the quality of technology start-ups based in the city is genuinely staggering.
There has been a huge surge of activity in recent years, with the unicorn companies Skyscanner and FanDuel both growing at pace. The council’s own incubator hub, Creative Exchange, was so successful last year, it extended to offer another 40 workspaces.
Since opening in July 2013 it has supported more than 80 businesses. It currently provides around 110 individual workspaces and is home to 36 companies. The Creative Exchange also offers incubation space to companies from Shenzhen who want to break into the UK market. Through creating a strong partnership, Edinburgh companies can make use of reciprocal incubation space in Shenzhen. This enables Edinburgh companies to continue to expand and break into new markets.
I certainly find myself taking up this role in exciting times for Edinburgh and look forward to working with government, investors, potential investors and the business community. This is all good news for Scotland – when you add it to the fact that the capital is the second most prosperous city in the UK outside London and as the “Gateway to Scotland” attracts almost four million visitors each year.
• Gavin Barrie is economy convenor for the City of Edinburgh Council