News Article

A Third World

08/08/2008

PROPERTY WEEK

A report describing Edinburgh as a ‘tertiary European city' could have a negative impact on plans to attract large occupiers. David Hatcher reports THE VALUE OF A BIG-NAME OCCUPIER TO AN AREA can be enormous. This fact has not been lost on Scottish Enterprise and its partners, the International Business Gateway and the City of Edinburgh Council, which are considering the release of green belt land around Edinburgh airport for bespoke headquarters buildings. This has been prompted by a recently published DTZ feasibility report, commissioned by the organisations, which warns of the difficulties of attracting such requirements and stresses Edinburgh's position as a 'tertiary European city'.

Scottish Enterprise has already relaxed its original condition of releasing land only for 'international business development' and it is now willing to consider allowing any 'accommodation supporting high-value corporate functions'.

The Royal Bank of Scotland's relocation to Gogarburn in 2005 is the template of success that Scottish Enterprise would like to replicate in encouraging companies to the area as part of its west Edinburgh planning framework. But requirements such as this are few and far between and competition between cities is fierce - Scottish Enterprise has its work cut out to attract other large occupiers to the area. Richard Marsh, associate director of consulting and research at DTZ in Edinburgh, says Scottish Enterprise may have to alter its strategy.

“There are only a very small number of large headquarters relocating in any given year, but there is a much larger number of high -value operations with characteristics similar to headquarters,” he says. “For example, a company may be looking to establish headquarters for a specific division or establish a marketing centre for the whole of Europe. Edinburgh can compete well for high-value operations and still secure many of the benefits of headquarters.”

Edinburgh faces some stiff competition for large occupiers, both on an international level and within Scotland. Maxim, Tritax’s 1m sq ft office-based scheme on the outskirts of Glasgow, can afford to provide substantial rent-free periods of up to around eight years, thanks to enterprise zone status, and this has the potential to deter occupiers from a move to west Edinburgh.

LIMITED CONCERN
The conclusions of the DTZ report, however, suggest that occupiers will see a clear distinction between the two locations. ‘Maxim has the potential to draw some types of occupiers from locations across central Scotland and beyond,' says James Thomson, business unit manager at DTZ.

“However, in terms of the high-value market sought for west Edinburgh, Maxim is of limited concern. The kind of occupiers being sought for Edinburgh are less sensitive to cost, which is the main advantage of Maxim, and more focused on recruitment, skills, communication, environment, and clustering with other similar operations.”

Edinburgh also has its own advantages.

“When the planned tram and rail network is fully linked with the expanding airport, west Edinburgh will serve as a transport hub for the east coast of Scotland, opening up access to much wider skilled workforce with better access to the city centre, the airport and Glasgow,” Thomson adds.

There is also the problem that public sector involvement in Edinburgh's development could potentially bring about compromising situations. For example, the EDI Group was set up by the City of Edinburgh Council to develop Edinburgh Park in partnership with Miller Developments. This means the releasing of green belt land could bring the public sector in competition with itself.

But Thomson does not agree with this notion,

“The most important thing is to avoid someone choosing to move outside of Scotland rather than outside of west Edinburgh or Edinburgh Park,” he says. “There is no reason why two complementary high-quality schemes should not co-exist, as they do in many other key locations worldwide.”

Following the DTZ report, Scottish Enterprise has a clear plan of action, although it was unavailable to comment.

“Scottish Enterprise has been charged with leading and developing a west Edinburgh implementation partnership, which will begin to turn the vision into reality for the long term,” says DTZ’s Marsh. 

“There is still much work to do and Scottish Enterprise needs to work closely with the Scottish government, the City of Edinburgh Council and key private sector partners, including BAA Edinburgh. “An early function for the partnership will be to develop a west Edinburgh implementation and delivery plan with the aim of influencing investment decisions across the public and private sectors. Once the delivery plan has been finalised with agreement from the various partners, Scottish ministers will be asked to endorse delivery.'