Employment land and Property Market. East Fortune Hospital Site, East Lothian. For. Historic Lothian Protection & Development Ltd.

Transcription

1 Employment Land and Property Market Review for East Fortune Hospital Site, East Lothian For Historic Lothian Protection & Development Ltd March 2014 Ryden, March 2014 Page 1 of 31

2 Contents 1.0 Introduction 2.0 East Fortune Site 3.0 Employment Land 4.0 Business Property Market 5.0 Commercial Property Market 6.0 Summary and Conclusions Appendix 1: Employment Land Proposals for East Lothian Appendix 2: Changes to Employment Land Proposals Ryden, March 2014 Page 2 of 31

3 1.0 Introduction 1.1 Historic Lothian Protection & Development Ltd instructed property consultants Ryden to investigate employment land and property markets, in order to establish market potential for land at East Fortune, East Lothian. 1.2 This report is intended to inform Historic Lothian Protection & Development Ltd about the nature of the employment market potential at East Fortune. It can also form a basis for discussions with the planning authority East Lothian Council about the level of employment uses that could be supported on the site. 1.3 This report considers possible employment-generating opportunities within a residential-led development at East Fortune. The analysis focuses mainly but not exclusively upon the principal office and industrial employment sectors. Given the nature and location of the East Fortune site, the report also assesses other employment-generating land uses such as retailing, community uses, leisure and tourism facilities and creative industries. 1.4 Section 2 of this report describes the site location, planning policy context and the East Fortune development proposal. 1.5 Section 3 analyses employment land in East Lothian and Section 4 reviews the business property market. 1.6 Section 5 considers the other commercial land uses which may be appropriate for this particular site. 1.7 The report is summarised and Ryden s conclusions and recommendations for appropriate employment uses at the East Fortune site are provide in Section 6. Ryden, March 2014 Page 3 of 31

4 2.0 East Fortune Site Context 2.1 East Fortune is a hamlet within East Lothian, 25 miles east of Edinburgh. It is located close to Athelstaneford and East Linton. The main road link to the A1 is the B1347. According to the Scottish Assessors Association there are 45 residential properties at East Fortune. 2.2 Existing employment and service uses in the area include a garden centre (Merryhatton), four workshops (East Fortune Aeromodellers, Clan Autos Garage Services, Lothian Landcare and East of Scotland Micro Light Training Association) and a couple of yards. There is no retail provision. The National Museum of Flight is also located in East Fortune. A Sunday market is held on the airfield each week 2.3 Site owner Historic Lothian Protection & Development Ltd. proposes a mixed-use development at East Fortune. The proposal would be residential-led, with land value generated by that development used to secure the future of listed buildings at the site (these are reviewed below). Location and History 2.4 East Lothian lies immediately east of Edinburgh s suburban edge in East Central Scotland. The local authority area extends eastwards through Dunbar and beyond to its boundary with the Scottish Borders. The principal administration centre for East Lothian is Haddington. The other main centres of population in East Lothian are Musselburgh, Tranent, North Berwick and Prestonpans. The population of East Lothian is 91, The subject site totals approximately 17 hectares and comprises the former East Fortune hospital. The site is located two miles northwest of East Linton, adjacent to the National Museum of Flight and the disused East Fortune airfield. The site location is indicated on Figure 1 on the next page. Ryden, March 2014 Page 4 of 31

5 Figure 1: East Fortune Site 2.6 East Fortune Airship Station and Aerodrome was the most extensive military site in Scotland in World War 1 devoted to military flying. Its function was to protect shipping on the east coast of Scotland. The entire site extended to 538 hectares of which 28 hectares were occupied by buildings. The complex was close to the main Edinburgh to London railway line and there was a station at East Fortune where materials and aircraft could be unloaded. 2.7 From 1917 onwards the station was dominated by a huge shed for nonrigid airships. The complex included extensive aeroplane sheds and hangers, its own gas plant and holders, water tower, compressor store, welder s shop etc. A large number of buildings were developed to house personnel and the camp area had its own telephone exchange. In 1919 the R.34 airship departed from East Fortune to make the first successful westbound crossing of the Atlantic. Figure 2 on the next page illustrates the site with an airship in situ in Ryden, March 2014 Page 5 of 31

6 Figure 2 Source: Scottish Aerodromes of the First World War by Malcolm Fife 2.8 After the War, the domestic site became a hospital. It continued in this role until 1997 (although it was temporarily requisitioned during WW2 for training purposes). The original corrugated iron buildings which are listed (Table 1) date from the WW1 period. The group listing describes these as the most complete example of a former purpose built WW1 airship base known to exist in the UK. Table 1: Listed Buildings at East Fortune Building Ref. Comment Drivers Office, Single-storey corrugated iron building. (former First Aid Station) Loading Bay and Stores 6340 Tall single-storey, triple-gabled corrugated iron building (former garage) Nursing Administration Block, 15 (former Barrack 6337 Single-storey corrugated iron office building. Master s Office) Offices 11 (former Officer s Servants Quarters) 6336 Single-storey H-plan corrugated iron building. Recreation Hall 3 (former Lecture Hall) 6341 Tall single-storey rectangular corrugated iron building Stores, 17 (former Sick Bay) 6338 Single-storey rectangular corrugated iron building. Welfare Office, 13 (former Warrant Officer s Office) 6335 Single-storey, L-plan corrugated iron building. source: Historic Scotland Ryden, March 2014 Page 6 of 31

7 Planning Policy 2.9 There are a number of key matters which are relevant to the planning background and the purpose of this report :- - The adopted East Lothian Local Plan, Policy ENV12, states that the former East Fortune Hospital site should be re-used for employment, leisure or tourism purposes. Housing would only be acceptable as an enabling development and to achieve the retention and long term maintenance of the listed buildings. - There is an obligation on the owners of listed buildings to maintain their fabric. This onerous requirement is unreasonable if there is no beneficial planning use for the site to which they are attached. - East Lothian Council refused planning permission in outline for the erection of 56 houses at the site in 2009 (application reference 05/00357/OUT), contrary to officer recommendation. This was on the grounds that the proposal did not accord with the local plan because it was not for the preferred uses. A second reason for refusal was that the proposed housing and listed buildings would only occupy part of the site leaving what the Planning Committee called a large area of dereliction with no immediate prospect of use or remedial action. The Committee considered this would adversely affect the amenity and security of residents at the site. The Director of Environment had recommended approval of the application noting there had been no interest over a long period in using the site for the preferred uses and that the applicant would accept conditions that the listed buildings required to be restored before the housing could commence. - The Minute of the Planning Committee of East Lothian Council at which this planning application was refused (6 October 2009) notes the debate. The Convenor of the Planning Committee at the outset asked the Director of Environment if the Local Plan Policy ENV12 could be interpreted that housing, as an enabling development, could not only contribute to the retention and long term maintenance of the listed buildings but also enable the creation of employment, leisure or tourism use. This wider interpretation of the role which housing could play at Ryden, March 2014 Page 7 of 31

8 the site was confirmed by the Director of Environment as a reasonable interpretation of the current local plan policy. It is also evident from the Minute that the Planning Committee had concerns about the restoration of the remainder of the site, beyond the area proposed for development. In effect, the Planning Committee whilst refusing planning permission for the proposed scheme invited comprehensive proposals for the whole site potentially including a range of uses but based on a residential development. - East Lothian Council is in the process of preparing a new Local Development Plan. There is an opportunity in the plan to review the terms of the current policy and redefine what constitutes enabling development at the East Fortune Hospital site and the prospects of attracting employment, leisure or tourism use. This report provides a rigorous analysis of the market to assist the shaping of a new policy for the former East Fortune Hospital site for inclusion in the forthcoming plan which will provide for its development and give it a sustainable long term future. Ryden, March 2014 Page 8 of 31

9 3.0 Employment Land Introduction 3.1 This section of the report assesses employment land supply and take-up in East Lothian. The research provides a context for potential employment uses at East Fortune. 3.2 SESplan Economy Technical Note (May 2010, updated November 2011) summarises Edinburgh city-region s transition from employment in traditional industries to the service sectors, and advocates flexibility in order to accommodate a wide variety of employment types. Drawing upon the sectoral analysis provided in the Note, a number of opportunities may be relevant to East Lothian. These include energy (both conventional and renewables), food & drink, tourism, life sciences and digital/ enabling technology. These potential growth areas are complementary to existing businesses and provision of local services within East Lothian. 3.3 Identified within the Note is a cluster of key employment locations in South- East Scotland. This identified cluster stretches along the A1 Corridor which passes through East Lothian from Musselburgh (Craighall Business Park) via Tranent (MacMerry), and Blindwells to Dunbar (Spott Road). East Fortune lies well outside of this employment corridor. Employment Land 3.4 Employment land supply in East Lothian is shown in Table 2. A total of hectares is allocated 1. There is no readily available employment land within East Lothian and 85% of East Lothian s employment land supply has major constraints. East Lothian has the lowest amount of effective employment land out of all the SESplan Council areas. 3.5 The employment land allocation of East Lothian comprises all undeveloped land allocated for employment use in the adopted Local Plan, or land which has a valid planning consent for such use. 1 SESPlan Economy Technical Note November 2011 Ryden, March 2014 Page 9 of 31

10 Table 2: Employment Land Allocations (Hectares) Immediately Minor Major Safeguarded Total Available Constrained Constrained City of Edinburgh East Lothian Fife Midlothian Scottish Borders West Lothian Totals Source: SESplan Economy Technical Note, November Immediately available land there is none identified and only 0.92 hectares is currently being marketed, see below - is defined as to have no significant constraints and is considered to be effective; minor constrained land could be made available within a 5-year period and considered to be effective; major constrained land has restrictions which mean it would not be available within a 5-year period, and is therefore considered to be not effective. Safeguarded employment land allocations are generally subject to constraints which may or may not be removed during a 5-year period; these comprise land identified in development plans for specialist company uses or expansion purposes, or land which is not currently allocated for employment use but is considered suitable for allocation in the longer term. 3.7 The adopted East Lothian Local Plan 2008 provides a series of further employment land proposals. These comply with the requirements of the Edinburgh & the Lothians Structure Plan to provide at least 40 hectares of employment land. The table in Appendix 1 summarises these allocations. All of the allocations are along the identified strategic employment cluster / corridor and at larger towns and/or established business locations. 3.8 Revised employment land proposals appeared in the SESPlan Economy Technical Note of November There have been some changes which are noted in Appendix 2, but the requirement to provide at least 40 hectares of employment land still complies as does the strategic preference. No further employment land allocations are proposed or required. Ryden, March 2014 Page 10 of 31

11 3.9 Two employment sites are currently being marketed in East Lothian. These are shown in Table 3 below. There is a total of 0.92 hectares of land being marketed. This is only 0.9% of the total amount of allocated employment land in East Lothian. Table 3: Available Employment Sites Address Size Description (ha) 19 Elphinstone Road, Tranent 0.36 Site would lend itself to workshop and light industrial use. Offers in excess of 150,000. Agent : First Surveyors Scotland Macmerry Industrial Estate, A199, Tranent 0.56 Part of a larger site (1.19 ha.) bounded by Weber Marketing Systems and the B6363. Has planning consent for the formation of a direct vehicle access. Agent : DM Hall Source: CoStar 3.10 The average employment land take-up for East Lothian for the period 1992 to 2005 is shown in Table 4. The average annual take-up is 2.8 hectares. Table 4: Employment Land Take-up Take-up Size (Ha) % of Lothians Take-up % % % Source: Edinburgh& Lothians Structure Plan Monitoring Report (2005) 3.11 The most recent take-up figures provided by East Lothian Council and are contained in Table 5. This suggests that take-up has been stronger in recent years. However the large take-up figure in 2010 is mainly accounted for by the Tesco superstore and NHS development in Musselburgh at 8.1 hectares, discounting this the average is 1.5 hectares per annum. These figures are also confirmed in Section 8 of the SESPlan Technical Note November Ryden, March 2014 Page 11 of 31

12 Table 5: Employment Land Take-up Average Annual Take-up Size (Ha) Since January 2005 ten land sale transactions (excluding residential land) have been recorded. These land transactions are detailed in the table on the next page. Transactions have tended to be very small in recent years. Table 5: East Lothian Land Transactions Address Size (ha) Description Satellite Park, Macmerry 0.37 Flat site sold at auction in May Had planning consent for 4 office Industrial Estate, Macmerry buildings which extended to 1,422 sq.m. A1 Macmerry Business Park, Tranent 1.62 Site sold May 2011 for 400,000 to steel fabrication company Had-fab for expansion of its business Castle Moffat, Garvald, 0.03 Vacant land for redevelopment. Sold by Scottish Water for 3,100 at auction Haddington in September Lochend Gardens, Dunbar Vacant land, mixed-use. Freehold sold at auction May 2009 for 10,000. Rectangular parcel of land. Stobshiel Reservoir, Humbie 7.14 Vacant land for redevelopment sold at auction November 2008 for 30,000. Heugh Service Reservoir, 0.16 Vacant land for redevelopment. Sold by Scottish Water for 184,000 at North Berwick auction in May Stenton, Dunbar Vacant site sold by Scottish Water for 1,600 at auction in February Main Street, Prestonpans 0.08 David Scott purchased the land from Scotmid for 175,000 in March Development plot on a prominent position off the High Street. Bridge Street, Tranent Former workshop premises in disrepair sold for 120,000 in March High Street, Prestonpans 1.01 Serviced site. Lidl Group purchased the land for 500,000 in June Source : CoStar Summary 3.13 Employment land allocations made within the finalised East Lothian Plan exceed Structure Plan requirements. However, the restricted supply of immediately available employment land may, according to the strategic planning authority, be constraining potential development in East Lothian. Ryden, March 2014 Page 12 of 31

13 3.14 The market for employment land has historically been small in East Lothian, with few sites being available and a small number of transactions taking place. One of the principal reasons for this lack of activity is the existence of a number of modern, serviced employment sites at satellite locations on the trunk road network around Edinburgh East Fortune is neither an established employment location, nor a large town, nor is it within a strategic cluster for future employment purposes. The site is a legacy allocation for employment uses which have failed to materialise. Ryden, March 2014 Page 13 of 31

14 4.0 Business Property Market Introduction 4.1 This section reviews employment property markets. It provides an overview of the current national and regional property markets and a more detailed analysis for East Lothian. Scotland 4.2 Scottish GDP grew by 0.6% during the second quarter of This contributed to an annualised rise of 1.8%. This rising growth rate is supported by business surveys which indicate positive trends and expectations, including growth in both output and jobs. The Scottish unemployment rate fell from 8.2% during June August 2012 to 7.3% for the same period in Fraser of Allander (June 2013) forecast Scotland s GDP growth to be 0.9% in 2013, followed by 1.6% in 2014, and rising to 2.1% in The modern industrial property market is driven by a diverse range of sectors, including manufacturing, distribution, ICT, and utilities and services. Trade counters, food & drink, motor vehicle and services also occupy traditional industrial estates. In the East of Scotland the occupier market has improved during 2013 and occupancy rates are rising 2. Demand is most notable for prime estates at trunk road locations. In addition to recent transactions there are deals in the pipeline for industrial land, design-and-build premises and existing second hand accommodation. 4.5 Demand for office property across Scotland is strengthening as markets recover in line with the wider economy, and sales and lettings have increased in both Edinburgh and Glasgow. Aberdeen s office market is driven by the offshore oil and gas industry and has been performing well for a number of years. Speculative development has resumed in Glasgow and is emerging in Edinburgh as sites are prepared for the next market cycle. The current phase of the market recovery is however strongly focused upon prime locations in these major cities nd Scottish Property Review, Ryden, October 2013 Ryden, March 2014 Page 14 of 31

15 East Lothian 4.6 The economy of East Lothian has traditionally been based around farming, fishing and coal mining. Although the economy is still largely rural it has diversified in recent years and now includes the public sector, health, technology, tourism and primary industries. Major employers include East Lothian Council, the NHS and British Energy which operates the nuclear power station at Torness. 4.7 East Lothian s economic output grew at an annual average rate of 1.85% between This was just above the Scottish average of 1.8%. It is estimated that output fell by -6.1% in 2009, broadly in line with the depth of the UK and Scottish recessions. Forecasts for economic growth in East Lothian in 2013 are slightly above the Scottish average. 4.8 The largest settlements in East Lothian are Haddington and Musselburgh, each of which has town centre offices and peripheral industrial locations. North Berwick and Dunbar have existing industrial employment locations. Other smaller towns such as Gullane, Longniddry, Tranent and East Linton do not have the same level of established employment locations as the larger towns. The MacMerry Industrial Estate is an out-of-town business park in close proximity to the A1 trunk road. East Fortune is a hamlet with only a few local businesses operating. Industrial 4.9 Table 6 indicates the main industrial locations within East Lothian. These are primarily to be found in Musselburgh, which is the largest East Lothian town and is in closest proximity to Edinburgh. Industrial units at these locations are typically less than 400 sq.m. in size Supply and take-up of industrial property in East Lothian on an annual basis is shown in Figure 4. Supply has fluctuated as a result of development cycles, peaking at 36,000 sq.m. in 2005 and 27,100 sq.m. in 2010 but falling to a comparatively 8,000 sq.m. in Since 2007, takeup has followed the economic cycle. Take-up fell with the wider economy in 2008/09 and has recovered gradually to 2,600 sq.m. in 2011 and Prospects for the Scottish Economy , Mackay Consultants Ryden, March 2014 Page 15 of 31

16 Table 6: Principal Industrial Locations in East Lothian Estate and location Details Macmerry Industrial The estate is located in close proximity to the A1 in an out-of-town location. There are in Estate, Tranent the region of 42 units totalling 32,800 sq.m. of space, of which three are currently available (1,741 sq.m., 1,199 sq.m. and 1,075 sq.m.). There has been some recent development here by Had-Fab for its own use. Fisherrow Industrial Located on the north side of Newhailes Road, ½ mile west of Musselburgh and 6 miles Estate, Newhailes east of Edinburgh city centre. Comprises 30 industrial units owned by Ashtenne Ltd. Road, Musselburgh Occupiers include Ridgetop Roofing, Scotspray Bodyshop and Redpath Plumbing. Newhailes Industrial Terraces in private and East Lothian Council ownership and owner occupation. Estate, Musselburgh Occupiers include Weatherford UK, Sunrite Blinds, Walton Construction, D & G Autocare and Howden Joinery. Three units available (257 sq.m., 482 sq.m.,317 sq.m.) Inveresk Industrial Industrial units in mixed ownership, occupiers include Zot Engineering, The Fitted Estate, Musselburgh Bedroom Company, Speedy Hire, Forth Art Company and Vision Sheetmetalwork. One unit (333 sq.m.) is currently available. Spott Road Industrial Estate, Dunbar Estate of 15 industrial units. Mix of East Lothian council, private ownership and owner occupiers. Occupiers include A1 Carpets & Flooring, Border Tyres, Dunbar Pet Food and Howden Joinery. There are currently no available properties. Whin Park Industrial Estate, Cockenzie Estate of 23 industrial units owned primarily by East Lothian Council. Occupiers include Lothian Beds, All Timber Crafts, Metoch Solutions and RNB Food Distribution. There are currently no available properties. Mid Road Industrial Estate of 13 industrial units built in the 1980s located half a mile south of the town centre. Estate, Prestonpans Owned by East Lothian Council. Occupiers include Dyno Rod, RCK Fabrications and Allstar Uhlmann UK. A unit of 1,100 sq.m. is currently available. Source: Ryden/ CoStar Figure 4: East Lothian Industrial Supply and Take-up East Lothian Industrial Supply and Take-up sq.m. 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Supply Take-up Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Source : CoStar Ryden, March 2014 Page 16 of 31

17 4.11 There are 18 industrial properties currently being marketed in East Lothian. Table 7 below shows the breakdown of these units by sizeband. Primarily these are small units less than 500 sq.m. There is very little choice of units greater than 2,000 sq.m. This demonstrates that the East Lothian industrial property market comprises mainly smaller units. Table 7 : Supply of industrial property in East Lothian Sizeband No of units sq.m , , ,844 Total 18 13,581 Source : CoStar 4.12 Since January 2008 a total of 59 industrial units - approximately 11 units per annum - have been taken up in East Lothian, totalling 18,164 sq.m. Table 8 shows the breakdown of these deals by sizeband. Table 8 : Take-up of industrial property in East Lothian since January 2008 Sizeband No of units sq.m , , , , , ,902 Total 59 18,164 Source : CoStar 4.13 Half of this market activity took place in Musselburgh, with the majority of these deals at Fisherrow Industrial Estate. The market is most active around the small sized units of less than 500 sq.m. There is very little activity in the market for larger units. A selection of these recent industrial transactions in East Lothian is examined in more detail in Table 9. The most active occupier sector is construction/ trades businesses, Ryden, March 2014 Page 17 of 31

18 Table 9: Recent industrial property transactions in East Lothian Address Size (sq.m.) Comments Unit 27 Fisherrow Industrial 93 Let to Two Tree Investments in Estate, Musselburgh April 2013 Unit 2, Block 3, Inveresk Industrial Estate, Musselburgh 186 Let to Arc Testing Services Scotland in December 2012 Unit 12 Newhailes Industrial 733 Let to Howdens Joinery in July Estate, Musselburgh 2012 Building 2 Muirpark, Haddington Road, Tranent 176 Let to Build Body Work Express in March 2012 Unit 19 Whin Park Industrial Estate, Cockenzie 213 Let to RNB Food Distribution in October 2011 Units 7-7/3 Newhailes Industrial 465 Let to DM Audio in July 2011 Estate, Musselburgh Units and Fisherrow Industrial Estate, Musselburgh 372 Let to Lochinvar Windows in June 2011 Units Fisherrow Industrial 93 Let to Newgrange Estates Estate, Musselburgh (Newbattle) in April 2011 Inveresk Mills Ind Park, 484 Let to The Joinery Factory in Musselburgh May 2010 Newhailes Road, Fisherrrow Ind Est, Musselburgh 93 Let to Findlays of Portobello in April 2010 Mid Road Ind Est, Prestonpans 119 Let to RCK Fabrications in March 2010 Source: Ryden / CoStar Office 4.14 The office market in East Lothian comprises town centre offices, business parks and business centres. The largest and best-established office market in East Lothian is in Musselburgh. Major office locations in East Lothian are summarised in Table Supply and take-up of office property in East Lothian is shown on Figure was the market low point, when supply jumped to 11,000 sq.m. and take-up fell to 160 sq.m. Supply has since fallen again to 7,000 sq.m. while take-up improved to 615 sq.m. for the year to December Ryden, March 2014 Page 18 of 31

19 Table 10: Office Locations in East Lothian Centre/ location Details Cockenzie Business Centre, Business centre owned and managed by Bizspace. Comprises 650 sq.m. in 16 suites 21 Edinburgh Road, from sq.m. Occupiers include Greentrax Recordings, WRVS and Amaranth Cockenzie Counselling. 7 suites are currently vacant. Harbour Point, Newhailes Proprietor is Harbour Business Centres. Modern office re-developed in Occupiers Road, Musselburgh include Spark of Genius, Data Flow and Daxtra Technologies. 47b Bridge Street, Tenemented office building in the town centre. Owned and managed by East Lothian Musselburgh Council. Comprise 8 office suites. Available on easy in/easy out leases. Occupiers include Llewellyn & Co, DM Design Bedrooms and The Edinburgh Liqueur Company. One suite is currently vacant. Satellite Park, Macmerry Development by Business Homes. Nine 2-storey buildings totalling 2,820 sq.m. Available for sale or to lease. Occupiers include Cellac, OUI3 Design, Allied Healthcare and Robop Ltd. Two offices are currently vacant. Eskmills, Station Road, Modern office space in two restored mill owned by Isertal. Stuart House provides open Musselburgh plan offices over 4 floors; occupiers include Oliver Asset Management, MNM Developments, WGM Consulting Engineers and Edomidas. One office (342 sq.m.) is vacant. Archibald Hope House totals 1,858 sq.m. of Grade A office space and is available Cockburn Halls, Former Miners Welfare Club, refurbished to provide business units. Occupiers include Fix 1-5 George Street, Ormiston my Mac, George More & Co, Caber Enterprises and British Red Cross. One suite vacant. Source: CoStar/ Ryden Figure 5: East Lothian Office Supply and Take-up East Lothian Office Supply and Take-up 12,000 10,000 sq.m. 8,000 6,000 4,000 Supply Take-up 2,000 0 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Source : CoStar Ryden, March 2014 Page 19 of 31

20 4.16 There are currently 23 office properties available in East Lothian totalling 10,053 sq.m. Table 11 shows the breakdown of these units by sizeband. As with the industrial market, the majority of available units (48%) are in Musselburgh. Cockenzie, Haddington and Macmerry have a further 35% of the total amount of offices available. Table 11: Supply of office property in East Lothian Sizeband No of units sq.m , , ,697 Total 23 10,053 Source : CoStar 4.17 Since January 2008 a total 44 of offices have been taken-up in East Lothian. This is equivalent to an average of 9 offices and 983 sq.m. per annum. Table 12 shows the breakdown of these deals by sizeband. The majority of office transactions (44%) took place in Musselburgh. The market is most active for office units smaller than 99 sq.m., which account for 63% of all transactions since No offices larger than 1000 sq.m. were taken. Table 12 : Take-up of office property in East Lothian since January 2008 Sizeband No of units sq.m , Undisclosed 1 - Total 44 4,915 Source : CoStar 4.18 Recent office transactions in the region are shown in Table 13. Musselburgh is again the main focus of activity. Ryden, March 2014 Page 20 of 31

21 Table 13: Recent office transactions in East Lothian Address Size Comments (sq.m.) 47-47b Bridge Street, 23 Let to Provision Fire & Safety in Musselburgh December 2012 A1 Satellite Park, Tranent 385 Let to Sunamp in November 2012 Unit 1-14 Mill Walk Business Park, North Berwick 46 Let to Firemac in December 2011 Room 4, 47-47b Bridge Street, 10 Let to Eskview Design & Musselburgh Publishing Ltd in April 2011 Units 2-3 Satellite Park, Tranent 123 Let to Allied Health Care Group in December Sidegate, Haddington 58 Let to East Lothian Community Care Forum in April b Bridge Street, Musselburgh 11 Let to The Edinburgh Liqueur Company in February 2010 Summary 4.19 The employment property market in East Lothian is primarily based upon local services. There are few large private sector companies in the region. The main settlements of Musselburgh, Haddington, Tranent (MacMerry), North Berwick and Dunbar have established employment property markets East Lothian s industrial market property is primarily focused on small units which are occupied by companies mainly servicing the local area. Demand for office property is limited, with the only established office areas being Musselburgh and Haddington. There is little to attract mobile employment to East Lothian from areas such as Midlothian and Edinburgh. Locations closer to the city have better trunk road links, access to a greater employment base and offer modern sites and premises East Fortune is a tertiary location outwith East Lothian s employment market areas, where market activity is negligible and demand for employment uses at the subject site has not materialised over many years. Ryden, March 2014 Page 21 of 31

22 5.0 Commercial Property Markets 5.1 Although not strictly classified as employment uses in planning policy terms, other commercial land uses might potentially bring investment and employment to the East Fortune site and help to deliver a mixed-use location across both new development and the existing village. 5.2 East Fortune s rural location and limited expansion potential mean that many commercial operators and developers targeting prime markets will inevitably not be attracted to the site. The analysis below is therefore kept to a minimum in order to demonstrate either where there is no market potential at East Fortune, or alternatively where some limited potential may exist. 5.3 Retail planning policy seeks to concentrate new development into existing centres. There is no centre with planning policy status at East Fortune. In terms of market demand, the retail sector is currently heavily focused upon prime centres in-and-around city locations such as Glasgow, Edinburgh and Aberdeen. The roll-out of major superstores by the likes of Tesco and Asda has slowed considerably, although there is strong activity in the provision of new local c (convenience) stores. East Fortune, even with new residential development, is not large enough to attract a branded convenience store (and also might not appeal due to the logistic of stocking such a store). 5.4 Local residents have access to an attractive and diverse town centre and mainstream supermarkets at North Berwick approximately 4 miles to the north. The only retail opportunity which might arise at East Fortune is a community shop, as new population is attracted to the site. This might be operated on a part-time basis and owned via a trust/ local co-operative. 5.5 Commercial leisure operators including cinemas, bingo, restaurant chains, coffee shops, gyms and health clubs require proximity and access to large urban populations to run viable businesses. There are currently 31 leisure requirements for Scotland 4 totalling between 8,900 16,700 sq.m., these requirements include a bowling alley, gym, cinema, comedy club and several restaurant chains (including Chiquito, Papa Johns, Carluccio s, Strada, Cosmo and Pizza Express). Indoor and soft play operators such as Gambado are also expanding and have current market requirements. 4 Source: CoStar Ryden, March 2014 Page 22 of 31

23 5.6 East Fortune is however orders of magnitude too small in population terms to attract this type of commercial leisure investment, even if such uses were acceptable in planning policy terms. 5.7 Tourism is an important element in the East Lothian economy, generating over 200 million and employing 15% of the workforce. 5 The area benefits from a scenic coastline, historic towns, villages, castles and museums. Golf is a major draw to the area - there are 22 golf courses and the Open golf championship was hosted again at Muirfield in Purpose-built tourist attractions include the award-winning Scottish Seabird Centre at North Berwick Harbour and the National Museum of Flight at East Fortune. The latter attracts around 100,000 visitors per annum and is situated adjacent to the East Fortune site. 5.8 SESplan Economy Technical Note November 2011 states that a target has been set of increasing revenue from tourism in Scotland by 50% from 2006 to East Lothian s Tourism Strategy to 2015 mirrors this objective. The most recent data for the period indicates visitor numbers in East Lothian of million per annum 6. The majority were day trips and numbers of UK visitors increased over the period while overseas trips fell. Serviced accommodation such as hotels and guest houses were the most popular form of accommodation for overnight stays. The preference for day trips to some extent reflects East Lothian s proximity to Edinburgh as a base for visitors with a wide range of accommodation and attractions. 5.9 The Edinburgh and the Lothians Tourism Accommodation Audit published by Scottish Enterprise in 2006 which recommended substantial new provision of accommodation is now rather dated, however the SESplan Economy Technical Note states that there is a requirement for additional hotel and holiday accommodation facilities which are well linked to tourist locations A selection of East Lothian hotels is presented in Table 14. These range from exclusive country houses to simple tourist hotels. Chain budget style hotels can also be found in Musselburgh as a result of its position adjacent to Edinburgh. 5 STEAM Report STEAM Report 2010 Ryden, March 2014 Page 23 of 31

24 Table 14: Hotels in East Lothian Hotel name Town Description Letham House Haddington 17 th century mansion. 5 star guest house rating Ducks at Kilspindie House Aberlady A restaurant with 23 en-suite bedrooms MacDonald Marine Hotel and Spa North Berwick Constructed late 19 th century. Undergone extensive refurbishment. 83 bedrooms, swimming pool, health club and restaurants. Scottish Tourist Board: 4 star Maitlandfield House Hotel Haddington Georgian style country house. 3 star with 25 bedrooms, bar and restaurant Premier Inn Inveresk Musselburgh Located on Carberry Road, Inveresk. Scottish Tourist Board rating: Budget hotel Greywalls Hotel Muirfield Edwardian country house (built 1901) on edge of golf course. 23 en-suite bedrooms and Chez Roux restaurant Nether Abbey Hotel North Berwick Located on Direleton Avenue. Seaside hotel with 12 bedrooms, refurbished Scottish Tourist Board: 3 star Carberry Tower Musselburgh Manor house set in 35 acres, refurbished in luxury bedrooms within main house with additional 29 rooms in the Edinburgh Lodges set within the grounds Travelodge Musselburgh Located at Moto Service Area, A1, Old Craighall. Tourist Board rating: Budget hotel Mallard Hotel Gullane Family run hotel with 18 bedrooms. Scottish Tourist Board: 2 star Open Arms Hotel Dirleton, North Berwick 12 bedroom hotel includes Deveau's Brasserie. Scottish Tourist Board: 3 star 5.11 East Fortune s main tourism assets are the surrounding golf courses and the National Museum of Flight. The latter will attract day visitors to East Fortune, which is an important aspect of the East Lothian tourism market but there is no major draw for overnight visitors to choose East Fortune as a destination. There is no nearby business location to attract a budget-style hotel development for the corporate market. Active in the market seeking new hotel sites are Premier Inn (16 requirements for Scotland), Travelodge (c. 5 requirements), Accor (ibis budget, ibis, ibis Styles, Mercure and Novotel), Rezidor (Hotel Missoni, Radisson Blu and Park Inn by Radisson) and Marriott (Moxy, 2 Scottish targets). None of these active hotel formats is suitable for rural location such as East Fortune, and none of the named operators has expressed requirement for East Lothian (Musselburgh already has a Travelodge and a Premier Inn, listed in Table 14 above. Ryden, March 2014 Page 24 of 31

25 5.12 Family pub/ restaurants are also active in the market seeking new premises. Marston s opened its first Scottish outlet in Dunbar in April 2013 and plans further openings. Slug & Lettuce is seeking to double the size of its restaurant estate and is targeting town centres including Aberdeen and Glasgow. East Fortune lacks the market scale and profile to attract such a chain pub/ restaurant. Other expanding chains such as BrewDog and Walkabout are bars more suited to urban centres One potential employment use suited to rural locations such as East Fortune is creative / craft industries sometimes termed creative original producers to distinguish from other creative industries such as digital media. This a growing sector which is currently flourishing in Scotland and especially in Edinburgh, where studios can be fully occupied with waiting lists. It is not commercially viable to develop a building completely devoted to creative industries as the costs will outweigh the value of the property. However, vacant buildings often present an opportunity for this sector. Table 15 provides a few examples of projects elsewhere which have used historic/ obsolete buildings to create craft activities and destinations Urban examples re-use obsolete buildings in areas of high demand for craft units. WASPs are a prominent operator of these projects. Rural examples also exist although some of these lean towards craft retailing with on-site shop and café (e.g. Holme Grange) rather than just production space. Rural conversions tend to be stone buildings; none of the examples use corrugated iron buildings. Ownerships range from local authorities and enterprises such as WASPs to owner-occupation. The examples are positive and informative, but there is no standard model and a proposition would be required for East Fortune Finally, a commercial mix at East Fortune might include community uses. Again given the small residential population there will be insufficient scale to attract local authority or health trust services. The appropriate scale of use might include a community-run nursery/ crèche, community hall for hire and possibly post office services within a part-time village shop. Ryden, March 2014 Page 25 of 31

26 Table 15: Examples of Craft/ Creative Industry Developments Project Details Urban / City Projects Hanson Street, Dennistoun, Glasgow WASPS Studio Former tobacco factory redeveloped in 2001 to become Scotland's first purpose-built studio and events complex. Facilities include 77 studios ranging from 175 sq ft to 1000 sq ft, project space, residential accommodation, café and kiln room. Patriothall Studios, Stockbridge, Edinburgh WASPS Studio WASPS converted the old Co-op bakery into a studio complex in There are over 50 artists' studios in the building with gallery / exhibition space. Meadow Mill Studios Dundee WASPS Studio Historic jute mill. Facilities include 58 Studios across three floors housing up to 100 artists, a large open-plan studio divided into smaller bay, a free studio to house Wasps New Graduate Prize winning artist and a gallery to showcase the work. Dovecote Studio, Infirmary Street, Edinburgh St Mary s Mill, Selkirk WASPS Studio Tapestry studio, housed in a renovated Victorian swimming pool (Infirmary Street baths) where refurbishments were completed in Along with the tapestry studio, there is a workshop, gallery space, cafe and shop. Rural/ Small Town Projects Former textile Mill. Eight open plan workspaces, a gallery / project space and a kitchen. Studios are all around 200 sq.ft. Balnakeil Craft Village, Durness Tweedbank Craft Centre, near Galashiels MOD nuclear attack early warning site, uncommissioned. Launched by The Highland Council in the 1960s as a craft village then sold to occupiers. Businesses include artists, galleries, a boatbuilder, musical instrument, holiday accommodation, bakery, café and hairdresser. The Craft Centre is a traditional stone farm built building converted into craft workshops of various sizes. Comprises 12 workshops owned by Scottish Borders Council. Holme Grange Craft Village, Wokingham Converted farm buildings in Comprises 20 shops and workshop units, and a tea room. Belgrave Hall Craft Village, Leicester The Old Tile Works, Barton, North Lincolnshire New craft units within the grounds of the historic Grade II* listed Belgrave Hall. Six units created from former outbuildings within a courtyard arrangement forming a craft village. Three units are within a shared building, with the other three units having their own front door. Built at the site of the William Blyth tileyard on the banks of the River Humber. It features a six-unit artisan village complex, coffee shop and restaurant and joins other shops, a museum and a children's play area. 6. Summary and Conclusions Ryden, March 2014 Page 26 of 31

27 6.1 Historic Lothian Protection & Development Ltd instructed Ryden to assess the potential for employment land uses at the former East Fortune hospital site, East Lothian. 6.2 East Lothian s economic development potential lies in the service requirements of the region itself and in opportunity sectors including tourism, energy, food & drink, life sciences and digital/ enabling technology. In strategic terms, economic development opportunities are directed towards a cluster/ corridor around the A1 trunk road. There is no strategic requirement to provide additional employment land elsewhere in East Lothian. East Fortune is in a tertiary market location outwith this strategic planning area. 6.3 The East Fortune site is largely undeveloped with neither an urban catchment, nor a position on the strategic transport network that would allow it to serve a wider market area or target visitor markets. 6.4 Table 16 summarises East Fortune s market potential by employment use. Table 16 Summary of Employment Use Market Potential at East Fortune Site Market Sector Sub-sectors East Fortune Potential? Comments Office/ business Office pavilions Managed centre Start-up office units No No No/ very limited No potential. Development not financially viable (i.e. would require subsidy). May be some very limited demand for small units. Industrial Serviced sites Distribution Units/ terraces Small workshops No No No No/ very limited No potential. Development not financially viable (would require subsidy). May be some very limited demand for small workshops to complement existing local units. Retail Comparison Convenience No No Insufficient local demand to support a formal retail development/ outlet. Could perhaps consider a local community shop in future. Leisure Cinema, bars, hotels, restaurants, etc No Insufficient local demand and site lacks prominence to urban area or arterial route. Craft Creative original Potentially Rural location and historic buildings might be producers of interest to creative community. Community Community shop, hall Potentially An increased local population could create the opportunity for a local resource. Ryden, March 2014 Page 27 of 31

28 6.4 The East Fortune site is a tertiary location for employment uses; demand would be negligible. Crucially, provision of new employment land and buildings would require cross-funding from housing development. This would increase the required number of houses at East Fortune to well above the number required to cross-fund retention of the listed buildings. Creating a second cross-funding requirement is not a sensible approach to the site. Grant funding via initiatives such as JESSICA/ SPRUCE, Enterprise Areas, Scottish Government Regeneration Capital Grant Fund, Urban Regeneration Companies and Scottish Enterprise would not be available for this location. 6.5 The only feasible solution to provision of employment-generating land uses at East Fortune is the possibility of re-using the existing listed buildings when these have been refurbished. These could potentially meet the very limited demand for light industrial / workshop units, craft/ creative industries, local shop and community hall opportunities. A potential additional use would be public access to one of the listed buildings, possibly with restoration to original interiors and provision of interpretative materials. This potential solution integrates the requirement to cross--fund retention of the listed building, with the desire to achieve a mix of land uses including an appropriate scale of employment-generating activity. 6.6 At this stage these uses can only be conceptual. Proving the potential of the buildings in terms of scale of opportunity and appropriate buildings to re-use, refurbishment or preservation requirements, and proposals for ownership and management, would form part of developing a costed plan for the full site including the residential use and cross-funding requirements. This work would be undertaken once the principle of the approach to the site has been established with the planning authority East Lothian Council. 6.7 Policy ENV12 needs to change to recognise, as the Planning Committee already has, that residential development should be the principal future use to underpin a re-use of the whole site and secure the future of the listed buildings. East Fortune lies within the East Coast Corridor defined in SESplan where East Lothian Council will have to meet significant housing growth requirements, particularly in the period to The location of this site has the advantage of good access to the North Berwick commuter line at Drem Station and is therefore a suitable location for new housing is sustainable development terms. There should be a planning policy in the New Local Development Plan which allows the site to be developed for housing which would underpin the future of the Listed Buildings and deliver Ryden, March 2014 Page 28 of 31

29 other supporting uses. The LDP policy should be revised accordingly. Ryden would be pleased to agree appropriate wording with East Lothian Council. Ryden LLP March 2014 Ryden, March 2014 Page 29 of 31

30 Appendix 1: Employment Land Proposals for East Lothian Proposal PROPOSAL BUS1: Craighall Business Park, Musselburgh PROPOSAL BUS2: Old Craighall Junction, Musselburgh PROPOSAL BUS3: Blindwells PROPOSAL BUS4: Spott Road, Dunbar - Industrial Estate Extension PROPOSAL BUS5: Alderston, Haddington PROPOSAL BUS6: Gateside, Haddington PROPOSAL BUS7: Hospital Road, Haddington PROPOSAL BUS8: MacMerry Business Park, Extension PROPOSAL BUS9: Tantallon Road, North Berwick PROPOSAL BUS10: Mid Road West, Prestonpans PROPOSAL BUS11: Kingslaw, Tranent PROPOSAL BUS12: Wallyford Business Park Details Approximately 34 hectares of land is proposed at Craighall, Musselburgh for Class 4 Business and Class 10 institutional uses, and associated infrastructure. Approximately 5 hectares of land is allocated on the north side of the Old Craighall junction at Musselburgh for Class 4 Business use and associated infrastructure. It is a requirement that at least 10 hectares of land for Class 4 and Class 5 uses will be provided within the proposed Blindwells New Settlement. Approximately 20.6 hectares of land is allocated for Class 5 (General Industry) to the south of Spott Road Industrial Estate. Outline planning permission has been granted. Approximately 3.3 hectares of land is allocated for business uses (Class 4) at Alderston, Haddington. Approximately 3.5 hectares of land to the east of the Gateside Commerce Park Haddington is allocated for business and general industrial uses. Approximately 1.5 hectares of land is allocated for business / industrial uses at Hospital Road, Haddington. Approximately 5.8 hectares of land is allocated for business class use at Greendykes. Class 4 Uses will be acceptable on the site in line with Policy BUS2. The Council will prepare a Development Framework for the site hectares are allocated for business use as an extension to the Tantallon Road Industrial Estate. Approximately 12 hectares of land at Mid Road West, Prestonpans is allocated for a mixture of general industry, business use and storage / distribution. Approximately 4.4 hectares is allocated for business class use and general industry at Kingslaw. An employment use is supported on approximately 4 hectares of allocated land at Barbachlaw. Class 4 uses will be acceptable in principle. Ryden, March 2014 Page 30 of 31