Sustainable Regeneration

Scotland
Background

2013 saw the completion of the Atria building, in the heart of Edinburgh's financial and business district. The development, which comprises two buildings providing 200,000 sq. ft. of Grade A office accommodation, and 4,000 sq. ft. of prime retail space, was developed by The City of Edinburgh Council.

In recent years, the number of developments such as Atria that are funded, part funded, or developed by local authorities has been increasing steadily due to some of the factors outlined below.

Key Factors

Sustainability is a key factor in these types of property development. Atria, for example, takes great pride in flagging its green credentials. The public and private sectors are both becoming increasingly focussed on sustainable development and encouraging the future of our towns and cities. The London Olympic Games (hailed as the most sustainable games the world has ever seen) and the Glasgow Commonwealth Games (which already has a sustainability plan in place in order to follow in London's footsteps) are recent high profile examples of this drive towards sustainable development.

This drive is backed by recent legislation such as the Climate Change (Scotland) Act 2009 (the "2009 Act"), and standards such as the BREEAM Rules and the BS8901 standard (which was developed specifically for events such as the Olympic Games and the Commonwealth Games). These have introduced new targets for low carbon emissions, low waste and high efficiency.

The 2009 Act came into force at the start of 2011. It created a framework for imposing significant new responsibilities on property owners to improve the energy performance of their buildings and reduce their greenhouse gas emissions. From this we have seen the introduction of Energy Performance Certificates (EPCs); and in 2013 the Scottish Government consulted on changes to the EPC regime to introduce recommendations, reports and action plans which do not quite make energy efficiency improvements compulsory but instead create an obligation for annual reporting where specified actions are not implemented. There is now an expectation that, as part of the Scottish Ministers' obligations under section 63 of the 2009 Act, a minimum EPC rating for properties marketed for let will be introduced in the not too distant future. This will encourage retrofit and perhaps the use of the Green Deal to fund improvements.

Another key factor is regeneration – an aspect that is very relevant for local authorities and public bodies. Tax Incremental Financing is intended to stimulate regeneration, with its goal of supporting and guiding the increasingly limited public finances available for assisting regeneration and helping to lever in capital from the private sector.

Legislation and government policy are likely to continue to emphasise these two factors as ingredients in future property developments in Scotland. Expect to see more "green" developments like Atria, and more collaboration between the private and public sectors.