Town Quay Development at Southampton Waterfront - Assignment Example

BPTS Worldwide Site Appraisal for ABP holdings plc Town Quay Development Projects Module - SV3046 BPTS Worldwide 10 Hobart Place London SW1 1UP ABP Holdings plc, Town Quay, Southampton, SO8 4RE 08 March 2007 Dear Sirs Re: Development of Southampton Waterfront Site Attached here is the report containing our proposals for the development of the Southampton Waterfront site. It includes a development appraisal, review of local and government planning and policies, residual valuation and options available to ABP when the project is completed. If there are any queries regarding this report, please contact us and we would be glad to help you. At Your Service, Simon Goff Project Site Town Quay development at Southampton Waterfront Source: Google Earth Contents Introduction 1. Appraisal of the Site 2. Development of the Site 3. Aspirations of the Local Planning Authority 4. Residual Valuation 5. Options Available for ABP Introduction The development of an area for financial viability and sustainability is a rigorous process of determining the proper design of facilities and services as to realize the full potential of the project. This report aims to do just that - to help ABP Holdings make full use of the Town Quay Site. The area is considered as a prime location because of its panoramic view of the sea and the volume of business activity surrounding the area. Although it is currently being used as a car park, the business potential of the area is quite considerable. There is a need to comprehensively and meticulously plan how the development project will operate to avoid any problems that may make the venture a failure. One must always take into consideration that a comprehensive evaluation of local and government planning policies and guidelines should be undertaken to ensure that the project is harmonious with them. The main goal is that the development actually complements and benefits the surrounding area and addresses the needs of the community. In short, the project is to be undertaken with full regards to the community as a whole. It has long been recognized that this strategy is one determining factor in the financial viability and sustainability of the venture. Thus, the driving principle behind the project is that development is properly designed with quality ensured all the while ensuring that the services offered will retain demand over time. In the development appraisal portion, an analysis is provided on the following: planning constraints, observable constraints, uncertain matters to be investigated, access and egress, neighbours and any other matters that are likely to influence the success of the development. A development plan is then provided that shows the layout for building massing, use and phasing, suggested storey heights, parking, landscaping, access and egress. We make use of an ordinance survey map to illustrate the scheme. Following this is an evaluation of how the development plans and the site appraisal fares with the aspirations of the local planning authority. It is also in this section where an analysis of how the scheme will fit in with the established property market, ABP's dock estate and the surrounding buildings. After all this, a residual valuation that analyzes the commercial viability is presented along with the provision of 3 options showing how ABP may obtain a return from the site. Section 1 - Appraisal of the Site Planning Constraints Local and government planning policies should be evaluated when planning for any development. Any project that fails to do this has a greater chance of failure as local laws are sufficient grounds for non-continuance of the project. In any case, we are developing the area for the local population and we don't want them to be alienated. In evaluating, there is a need to determine what construction practices and parameters are allowed on the area. For example, vertical structures may only have a certain height or the noise levels generated by construction equipment must be at a certain decibel only. It should be noted that although planning permission had previously been granted for a scheme on the site, it doesn't necessarily follow that any future development will automatically be granted planning permission in the future. Nonetheless, it gives the developer an idea of what will be most likely approved saving him time and effort. One important policy that should always be addressed is the Section 106 of the Town & Country Planning Act 1990 which requires developers to minimize the impact on the local economy and provide amenities that benefit the community. What the developer can do is to coordinate and negotiate with local authorities to determine how the development can contribute to the community. However, the developer must have an idea of how to go about this even before consulting so as not to compromise the financial costs of the project. Remember that conformance to the policy will usually translate to a facility or services that may benefit the community but financially degrade the firm. Some options available to the developer are to provide social housing, improvement of scenery or reduction in pollution levels. The developer can refer to the Government's Planning Policy Statement 3 (PPG3) which details the level of affordable housing a development should aim to supply as well as the type and quality of housing. Previously, PPG3 set that 25% of the houses should be affordable. However, PPS3, a revision of PPG3, eliminated the 25% clause and instead offered a flexible approach dependent of the requirements and needs of the area. Along with the evaluation of PPS3 is the evaluation of PPS1 which is a policy focusing on sustainable development. A review of the Planning Policy Statements (PPSs) will prove to be sufficient in addressing the local and government's policy planning concerns. Other examples of relevant policies that need to be evaluated are the: PPS 12 - Local development framework, PPS 13 - Transportation and Land Use and PPS 23 - Planning and pollution control. Under local land use classification, the royal pier and Town Quay have been identified as MSA 4. This means that the development allowed for the area is of the type: residential dominated mixed use development. The type allows for the following facilities to be constructed: Offices (B1) Hotel Retail (A1 and A3) Leisure (D2). It is therefore expected that these are the facilities which the development will pursue. With regards to the necessity of creating of open public spaces, Policy L22 comes into play. The policy calls for provisions for the creation of open public spaces with activities and themes assisting in the growth and enhancement of cultural activities. Providing water based recreation for waterfront developments is a must according to Policy L13. The provision of bars and restaurants must be evaluated with regards to CLT 14 which will permit a night time economy on the site. These facilities are crucial to attracting people to the site. We can never stress the importance of analyzing and reviewing the development with government policies and programs. To comply with them is a must and so we must take these into the design considerations. Neighbours Since the development should benefit the area, it follows that it must also contribute to the adjacent activities- whether they may be commercial or domestic. The main principle behind neighbourhood consideration is that the development complements rather than competes with any existing developments. To be able to arrive to an appropriate design, an on site inspection should be carried out. All activities in the area must be taken into account. The designer must then seek to provide alternative shops and services that differ from existing developments in order to prevent a fall in values for the surrounding area. It is against the principle of benefiting the area. The development must also be aesthetically harmonious with the surrounding area. Architectural design and street scape must be in synergy with the scenery and mood of the surrounding area. Since the development is very close to the sea, we may expect a marine thematic approach. However, we should not only make this as our only consideration. We must also investigate the theme assumed by surrounding facilities. Some of the prominent facilities in the area are: To the West of the site is Town Quay which contains the foot ferry (Red Funnel Ferry) that travels to the Isle of Wight. The development has failed due to a variety of causes but mostly due to poor planning and foresight. To the North West of the site is a casino and small nightclub. These facilities are generating much desirable attention and are seen to be contributing to the regeneration of the area. Adjacent to the site are a number of almost decrepit office blocks. It is here where the establishments will benefit from the project as the development increases property value and stimulate redevelopment. To the North of the site is Queens Park. Surrounding this park are offices and a new residential development. Uncertain Matters to be Addressed The site is located on reclaimed land which presents a challenge to the geotechnical and foundations engineer. Basically, buildings are held to the ground by columns of reinforced concrete bored thru the ground. The problem is that reclaimed areas generally have semi-pervious layers of sand and clay leading to structural instability. There are techniques already available to the engineer to the addressed this which includes acquiring borehole data to determine soil properties and appropriate foundations. Salt content of the atmosphere surrounding the area is also very high since it is very close to the sea. Salt corrodes metals and even concrete. To prevent costly maintenance, the engineer can make use of metal coatings and cement additives to minimize the salt's corrosive effects. Access and Egress The busy a33 is currently the only access and egress point situated to the north of the site. There is however potential to create a secondary access point cutting through Vokes Gardens, however the Local Authority (which owns the freehold) will have to be compensated. In order to determine the best point of access it will be necessary to discuss the scheme with the Highways Authority and also carry out extensive traffic surveys along the road. Other considerations Social Housing - Based on the texts of The Southampton Regional Housing Strategy 2006, there is a substantial undersupply of affordable homes in the South East. In total, there is a need for 5,300 more social housing units. The developer can take advantage of this fact by offering to build social housing units (that are cheap). This will look more favourably for the council as it will help them achieve their housing goals. It increases the chances of granting permission as long as it adheres to Government guidelines as stated in PPS3. Eco housing - The Southampton Regional Housing Strategy 2006 also aims to increase the number of buildings that achieve a 'very good' eco homes rating. Any proposed development should therefore seek to have as little environmental impact as possible and provide energy efficient homes. Section 2 - Development Plan The following plan illustrates the proposed site layout: The key aim of this development is to create a unique development that identifies Southampton as progressive and innovative city, while being sympathetic to the areas tradition and character. Furthermore to reduce the impact on the environment all the buildings should be carbon neutral and achieve the highest possible energy efficiency rating. Building massing and use As per the above plan the site will consist of two residential towers, an office block, a hotel, bars/restaurants (A3) facilities, an events centre, an activities centre and a number of retail (A1) units. Residential The residential element of the proposed scheme will be provided by two eight storey blocks. The buildings will be of modern, innovative design creating landmark buildings. The design should also incorporate a marine theme to reflect the character of there location. Below are some examples of the type of design that the architects should be aiming to achieve: The residential blocks are located to the west of the site so that the residents will benefit from the views over the existing marina. Both buildings will have panoramic views so that the all aspects of the surrounding area can be appreciated. The apartments will range from 1 -3 bedrooms and will provide over 100 social houses. Offices The office element will consist of a single block providing 23,500 m2 of accommodation arranged over 6 floors. The block will be located to the north of the site overlooking Queens Park. The area surrounding the park comprises mainly of office accommodation, thus by locating the offices in this position it will create a small business district around the park. Due to its proximity to the busy road this location would not be suitable for residential or the hotel, therefore an office should achieve the highest land value. Below is an example of office design that should be aspired to in this development. Hotel The hotel will be located on the Southern tip of the site providing a landmark that is clearly visible to ships that are travelling into Southampton. The hotel will be 7 storeys high providing over 300 rooms with views across the water. This location will be favourable to tourists who will be drawn by the views and innovative design. Bars/Restaurants The bars and restaurants will be located to the west of the site situated in front of the residential blocks. An attractive waterfront promenade will be created and each unit will have views over the marina. They will be clearly visible to people travelling in on the Red Funnel Ferry and the attractive location should pull customers in from the surrounding area. Events Centre The events centre will provide flexible space that can be used for a number of purposes, including exhibitions and as a gallery. The building should be a modern work of art that helps to identify this area as a unique development. Located to the east of the site the centre is easily accessible and will be clearly visible from all aspects of the site. Retail (A1) The retail element is situated to the east of the site next to the events centre. Again this area is clearly visible and accessible. In order to set this development apart there should be an emphasis on attracting local food retailers rather than the usual Tesco's etc. Activities Centre The activities centre will be for residents and visitors, providing water based recreation. The facility will be initially funded by the service charge from other areas of the development, with the long term view to finding a club that will rent the centre. The centre will be located in front of the hotel, next to the dry dock so that the water is easily accessible. Landmarks The development will feature two landmarks, these being the bridge to the north of the site and the lighthouse/viewing platform on the Southern tip of the site. The bridge will link the development to the city by providing easy pedestrian access across the road. The lighthouse/viewing platform will be a distinctive feature of the site and should pull visitors right through the site. Storey heights Although planning permission was previously granted for a 15 storey building it was felt that any building this high would dominate the site and overshadow the remaining buildings. The height of the buildings, for example the 8 storey residential block, will make them clearly visible while remaining sympathetic with the surrounding area. Parking In order to make the area pedestrian friendly and to try and encourage people to seek alternative transport minimal car parking will provided within the development. The area to the east of the site which is not being developed will kept as parking with designated areas for the offices, residential, hotel and visitors. Landscaping The site will be designed to incorporate plenty of open public space including grassland and the planting of vegetation. Sculptures will be a feature throughout the development to improve the aesthetics of the area and to draw people to the site. They will give the development character and create a sense of place. The maintenance of these areas will be funded by the service charges from the offices and hotel. A public walkway will created around the perimeter of the site. Section 3 - Aspirations of Local Planning Authority The Southampton City Centre Urban Design Guide sets out key design principles for the city. The main requirement of this document is: 'Improved perception, image and visual quality of the city centre, appropriate for a leading city in the 21st Century' The document identifies 'character areas' whereby development of each area should be, 'articulated and enhanced and their connectivity and interrelationship within the city centre reinforced'. The site is zoned within the waterfront area. Any development in this area should 'reinforce individual character and create landmarks'. The key design issues that the L/A want to address are: Lack of connection of Waterfront to the city centre Poor build quality of developments Poor environment setting of landmark buildings Improving visual and physical permeability of the waterfront Defining key landmarks to mark the end of piers The proposed development will satisfy these key aims and help to define Southampton as a world class waterfront location. This will be achieved through a number of deign features including: The modern bridge that spans across the A33 will improve access for pedestrians and should help to connect the site to the city centre. In addition signs should be placed in the city centre guiding people towards the Waterfront and advertising the locations attractions. The buildings will be of modern, innovative and high quality design. This will ensure the longevity of this development and will help define a new landmark destination. The lighthouse/viewing platform will be a defining landmark that marks the end of the pier. Marine architecture will and landscaping will clearly define the area, while at the same time being sympathetic to the surrounding area. The outdoor activities centre will promote water activities and entice people to the waters edge. Links with the established property market Extensive market research has identified a demand for both high quality housing and commercial property. Section 4 - Residual Valuation Residual Valuation of Site Retail A3 No of units 7 Construction Fees Frontage 20 Professional Fees 12.50% Depth 15 Planning 10,000.00 Area ITZA per unit 195 Preliminary Services 120,000.00 Rent ITZA 250 Letting and Disposals Total Market rent 341250 Agent/legal 10.00% Yield 6.75 Sales 7.50% Marketing 75,000.00 Office Interest Total sqm 23520 Interest 6.25% Rent per sqm 177.5 Est Dev Length (Months) 36 Total Market rent 4174800 Holding Period (Months) 36 Yield 6.25 Residential Total sqm 38400 Flats Number Actual Sale Price Total revenue 1 Bed (60 sqm) 166 156750 26020500 2 Bed (80 sqm) 140 208952 29253280 3 Bed (100 sqm) 90 237500 21375000 Total: 76648780 Affordable Number Sale Price (65% of Market Value) Total Revenue 1 Bed 40 107250 4290000 2 Bed 40 142967 5718680 3 Bed 10 162500 1625000 Total 11633680 Total Revenue from residential: 88282460 Hotel Total sqm 20160 Number of rooms 155 Total Market Rent 3124800 Yield 5.75 Retail A1 Number of units 3 Total sqm ITZA 220.5 Rent ITZA 185 Total Market rent 122377 Yield 6.75 Purchase Costs 5.75 Developers Profit 20 Site Acquisition 5.75% Costs Construction costs: Area m2 Cost m2 Total Retail A3 2800 1100 3080000 Office 29400 1750 51450000 Flats 31800 1500 47700000 affordable Homes 6600 1000 6600000 Hotel 25200 40k per room 12000000 Retail A1 1200 1100 1320000 Events Building 1000 1520 1520000 Water activities building 300 666 200000 Road surfacing (30% of site) 5016 1000 5016000 Total 128886000 Contingency % Total cost Landscaping and parking 7 9159220 Foundations 5 6542300 Total 15701520 144587520 Model Retail Investment Value Rental Income 341250 YP in perp 16.66 GDV 5685225 Less Purchase Cost 5.75 Office Investment Value Rental Income 4174800 YP in perp 16.66 GDV 69552168 Less purchase costs 5.75 NDV Residential Investment Value Revenue generated from sales: 88282460 Hotel Investment Value Rental Income 3124800 Yp in perp 17.391 GDV 54343396.8 Retail A1 Investment Value Rental Income 122377 Yp in perp 16.66 GDV 2038800.82 Events Centre Investment Value Rental Income 52000 YP in perp 16.66 GDV 866320 Total GDV 220768370.6 Development Costs Total Construction costs: 128886000 Contingency 15701520 Total Construction costs inc contingency: 144587520 Fees Planning 10,000 Statutory Preliminary Survey 120000 Professional fees 16110750 Legal & Agents fees First years rent 4638427 Fees @ 10% 463842 Sales 91407260 Fees @ 1% 1077825 Total legal and agents 1541667 Developers profit @ 20% 25777200 Total Cost 188,147,137 Site Value Residual Value 32,621,234 Section 5: Options for obtaining a return from the site There are a number of options available to ABP including; ABP shells out the funds for the development then sells the developed area once construction has been completed. ABP agrees that the developer funds the entire development. In this case, ABP is expected to permit the developer to occupy the area. Once the project has been competed, ABP and developer enter into a ground leasing contract where the developer acquires the lease while ABP receives the ground rent. ABP funds the development and maintains rights to the property. All sales and rent revenues belong to the firm. Since ABP's expertise falls under the ports business, it would be unadvisable to adapt option 3. For option 1, ABP loses rights to the property but may gain considerable money from the sales. For option 2, ABP does not lose rights to the property but will receive revenues that will parallel only revenues for option 1 only after some years. It is within the discretion of the company which they consider to be valuable - retention of the property or revenue generated. Bibliography Read More