Is mixed-use development the saviour of our city centres?
Sometimes it feels as if it would require a trip in the Tardis to discover a city centre anywhere in the UK that is truly a destination worth spending time or money in.
The Covid pandemic decanted tens of thousands of workers from their offices to makeshift desks at their kitchen tables (while remembering to unmute themselves in the unfamiliar territory of Teams and Zoom meetings). Then came the subsequent metamorphosis from government-prescribed working from home (WFH) to a more flexible, hybrid form of employment.
The recent round table discussion that The Business convened in association with TLT (which is covered on pages 34-35 ) addressed some of these challenges, beginning with a discussion of the ambitious plans to regenerate Glasgow’s city centre.
It recognised the seismic impact that Covid has had on the centre by accelerating already growing trends in online shopping and hybrid working – and the effect this has had on the demand for retail, leisure and office space.
These effects, of course, have extended beyond Glasgow to Edinburgh, Aberdeen, Dundee, Stirling, Perth and all our significant towns. And among the most significant solutions being discussed with increased frequency – indeed urgency – is mixed-use development.
This can be seen on two levels. One is the pragmatic view taken straight from the blueprint where mixed-use is considered crucial for the future of UK cities, promoting diversity in urban spaces through combining residential, commercial and recreational elements which should mean enhanced sustainability and greater economic resilience through the reduced reliance on a single type of land use.
On a daily, human level though, we are looking at a long and demanding list of reasons for the return to our city centres. In effect, for clean, friendly places that suggest not only the workplace but an enjoyable day out for the family, with parks and pedestrian-friendly zones; unique shopping, dining and cultural experiences; better public transport; cinemas, sports facilities, museums and other cultural draws. And crucially, better support for local businesses and residential communities.
Alasdair Steele is head of Knight Frank’s commercial business in Scotland and agrees we are in a very interesting period in the real estate cycle when it comes to re-imagining our cities.
“Obviously, things have been difficult and the economic and geopolitical issues that have taken place all over the world have majorly impacted commercial property and the working environment – as they have every other walk of life,” he says.
“Even before Covid there had been a fundamental change taking place within city centres, one moving from the scenario of the traditional office, shop and pub to something that’s much more realistic, including city centre living, mixed-use blocks and increased focus on the whole experience of coming into town or city centres.
After the pandemic, Steele describes it as “a bit like the burning of the heather – going through the death of the old to allow the growth of the new”.
While the round table discussion concentrated on a vision for Glasgow, Steele believes that Edinburgh is a particularly good example of this shift in emphasis.
“We’ve seen the beginnings of a rapid turnaround in the city. Prior to the opening of the St James Quarter, which is a modern, fit for purpose, multi-use shopping centre and which is doing very well, there was some concern about the levels of vacancy on Princes Street and George Street. Where would rents go?”
In fact, he says, George Street has found its feet again very quickly and has become a high-end shopping destination; one that’s been labelled ‘the Bond Street of the north’. It might be a cliché, but it is accompanied by undoubted cachet.
“Princes Street is also becoming what most people always thought it needed to be: much more of a leisure-focused experience, utilising the upper floors of buildings that look out over the Old Town and castle and were formerly dead space for retail offerings.”
A much-quoted example is the flagship Johnnie Walker Experience that offers more than the chance to buy whisky. Over several floors of what was the former House of Fraser department store, it claims to offer whisky aficionados “an immersive journey through the creation of Scotland’s national drink” as part of a £185 million investment in whisky tourism by drinks giant Diageo.
Barry McKeown, a real estate partner and head of the Glasgow office at Shoosmiths, returns to the prospects for Glasgow. “Scottish cities – and particularly Glasgow – have been slower to bounce back from the pandemic when compared with other comparable UK cities, in terms of retail footfall and office occupancy levels,” he says.
“From a real estate perspective, the challenge is to provide potential inner-city residents with a rich blend of attractive, energy-efficient, mixed-use developments that offer residents ease of access to sustainable transport, their offices, restaurants, gyms and retail experiences.
“To put this in context, Glasgow City Council has via its City Centre Living Strategy stated its aim of doubling its inner-city population (residents) by 2035 and to achieve this the city needs to be transformed with real estate development at its heart.”
McKeown points to plans for major developments being used to steadily transform city centres across Scotland. “For example, there are proposals for Buchanan Galleries to redevelop as a huge mixed-use scheme and St Enoch has the same idea with a mix of build-to-rent (BTR), residential, leisure and commercial units.
“We have seen the same in Dundee with the V&A and the Dundee Waterfront project. Developers see this as the future and local authorities recognise that they need to find ways to attract more residents to live and work in the city centre to fund their services.”
He adds however that without major support from central government or a system such as the Business Premises Renovation Allowance (BPRA) that incentivises private sector parties to invest there is a risk of a funding gap to positively retrofit older real estate stock.
“This is a fundamental issue in terms of overcoming challenges to re-imagine our inner-city landscapes. Without key incentives to encourage the repurposing of housing and commercial property stock – including derelict buildings – we could have a scenario whereby beautiful, super-sustainable new buildings sit adjacent to unsightly and derelict or neglected stock.
“Unfortunately, the effect of this will be to create city centre areas that are disjointed and potentially deter people from choosing to live, work and play in an inner-city community.”
Knight Frank’s Alasdair Steele underlines the sustainability imperative. “People want city and town centres with a clean transport infrastructure that works, and to be able to go to the gym, eat at nice restaurants and cafes and walk in green spaces. We need to make sure we do everything we can to protect the environment and also encourage people back to working spaces for at least some of the time in what has become a hybrid working environment that is obviously here to stay.”
City centre of attention
Graham Lironi reports from TLT’s Next Generation Cities round table discussion debating the initiatives that are shaping the future of Glasgow city centre
The inaugural Next Generation Cities round table began with a discussion of the ambitious plan to regenerate Glasgow in recognition of the major impact the pandemic has had on the city centre. Covid lockdowns accelerated existing trends of online shopping and hybrid working, with a subsequent impact on the demand for retail, leisure and office property space, marking a notable strategic shift away from a reliance on retail to residential.
At 20,000, the number of residents in Glasgow’s city centre is lower than other comparable cities. The plan is to boost the night-time economy, aided by more footfall from local residents, and to double the city centre’s resident population over the next 12 years.
Participants in the round table discussed the plan to redevelop the ‘Golden Z’ – the area encompassing Sauchiehall Street, Buchanan Street and Argyle Street – to incorporate 1,350 new or converted flats with the aim of bolstering economic growth in the city centre.
Among the proposals are plans to replace the Buchanan Galleries and St Enoch Centre indoor shopping centres with more open streetscapes, green spaces, and city centre homes.
Alistair Wood, of real estate advisor Savills, suggested that the challenge for the Buchanan Galleries developers and public sector bodies is how to work together to improve residential accommodation and make it accessible to a range of people so that the city centre reflects the wider population across the council area rather than just becoming a place for certain types of residents.
Jim Webster of the architecture and urban design studio HAUS suggested that the Buchanan Galleries project has the ability to transform the perception of the city centre by reinvigorating it, and integrating it properly with the station, while Virginia Beckett of private equity firm Regent Capital argued that a cultural shift towards city centres is needed so that people view them differently.
Highlighting industry engagement success by the University of Strathclyde with its Technology and Innovation building (TIC), and Bruntwood SciTech’s plans to transform Met Tower into a commercial hub, in a city innovation district where tech and digital university spinouts, startups, scaleups, and high-profile tech businesses can co-locate and benefit from being part of an innovative, collaborative tech cluster, Beckett noted that those evolutions are key to bringing high-value jobs into the city centre.
The discussion proceeded to consider how the repurposing of properties in the former commercial business district will allow the building of many more homes as well as the creation of self-sustaining neighbourhoods in the city centre, meeting the challenges of changing demand in retail and commercial space, and ensuring that the supply of properties meets the new and evolving demand for different uses to create a thriving city centre in the future.
And it was noted that in seeking to boost the resident population, the plan is for homes to be of various formats and tenures, including family, student and ‘later living’ accommodation. Around half the homes envisaged are seen as coming from refurbished and repurposed buildings, while half will be new-build, with many using space above shops on upper floors.
Alistair Wood suggested that we need to embrace a cultural shift towards living in more densely developed areas.
“For families, the aspiration in terms of planning policy is to move people away from the traditional suburban semi-detached and detached developments to more high-density developments in and around city centres and existing infrastructure because endless building on greenfield sites requires a lot more roads, schools and healthcare provision, whereas if we are driving towards sustainability, we do have to look at living in more densely developed areas,” he said.
A consensus emerged on the panel of the need for community facilities including schools, health clinics and more parkland. It was also agreed that while less conventional office space will be needed in the city centre, there will be a requirement for more flexible and agile workplaces.
David Cobban of Savills suggested that the next challenge for offices concerns embodied carbon, which makes new development challenging, with some corporates favouring refurbs over new buildings because of embodied carbon
In response to the observation that the cost of converting secondary office stock in Glasgow is astronomical compared to new-build, Webster suggested that, when quantifying building projects, rather than talking about cost in terms of pounds, carbon becomes a new metric.
An ensuing discussion around the importance of considering where developments sit within communities and where social interaction arises led Giles Edwards to reveal that, ahead of any scheme, the real estate investment firm FORE Partnership, of which he is associate director, undertakes a needs analysis encompassing considerations such as social mobility, food poverty and homelessness.
“It’s not just about how we can make buildings greener, but how we can stitch them into the community through working with an existing network of community organisations to help deliver change,” he said.
Picking up on this point, Bank of Scotland’s Graeme Steel commented that the bank is strategically aligned. On infrastructure and community-led projects it is increasingly focused on measuring social impact as well as the green credentials, and how that leads to a more sustainable and inclusive future.
A detailed discussion about the future of secondary offices in Glasgow led David Cobban to comment on the existence of a viability gap in terms of the money needed to spend on these to make them meet the needs of what occupiers demand. Michael Gallacher of commercial property developers Abstract suggested that the only way to get private investment to pick up the slack is to incentivise it, noting that a tax incentive would allow investment to come into the city and create space that is occupied and so create jobs and yield tax income.
Bringing the wide-ranging discussion to a conclusion, chair Howard Beach, partner in TLT’s real estate team, noted that getting the right mix of different activities – from retail and hospitality to culture and residential – would be central to revitalising the city centre.
For Glasgow, that means finding ways to repurpose vacant property – both heritage assets and newer buildings – and working proactively to find solutions and secure positive development for vacant sites.
As the participants of the round table discussion agreed, Glasgow requires a city centre of multiple layers supporting shopping, socialising, new living space and contemporary offices for building business.
Many of the existing buildings will need to be repurposed to match this flexible offering and the quicker this is achieved the better placed the city will be to meet its net-zero targets.
Beach concluded: “The Covid-19 pandemic has reshaped our relationship with our cities. Nowhere is this more evident than in Glasgow. The city is undergoing a wave of development aimed at making Glasgow a hub of industry, as well as a thriving metropolis of culture, education and sustainability.
“Having just relocated to Scotland’s most sustainable office development located in the heart of the city – Cadworks – we’re alive to the importance that businesses play in supporting the growth of our cities and the knock-on effect this can have on the underlayers of our society.
“It was a pleasure to bring together some of the organisations driving this regeneration and to hear varying thoughts and opinions on what will come next for the city of Glasgow.”
Partner Content in association with TLT.