Proposal Financial Appraisal

Urban Studies and Planning

Word Account: 1244

1. The Initial Development Proposal

1.1. Introduction

The site studied in this report is in Block I (Figure 1) of Sheffield Neepsend. The shape of the site is a

triangular wedge with an east-west trend. The block area is 4676.74m2, with approximately 160m long

of southwest side, 100m long of the north, and 90m long of northeast. It has 18 existing buildings,

including one Grade II Listed building, with a total building area of about 4300m2 (Figure

2).

Figure 1. Location of Block I in Neepsend.

Source: Digimap

Through on-site investigation and network data research, the report summarises the existing building

information of Block I (Appendix 1). Most of the existing buildings are used for industry with low

building quality. However, it is obviously incompatible with the historical industrial characteristics of

Block J (Figure 4). Besides, due to the limitation of functions, the buildings are of high density that

leads to no effective public space. Meanwhile, the layout of the buildings is disorderly and irregular.

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Thus, the development proposal of only retaining the listed building and demolishing other buildings

will be adopted.

Figure 2. Existing Buildings and Building Area (m 2 ) in Block I.

Source: Digimap

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Source: Group 16 Neepsend AAP.

Figure 3. Neepsend Development Vision.

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1.2. Conceptual Design of Block I Development

Based on the development proposal of Neepsend Area Action Plan (AAP) made by Group 16, Block I

should be an industrial development Area in general (Figure 3). Based on its situation, the site position

as a gateway of industrial zone, and its primary functions include skills training, Industrial history

exhibition, office, and small workshop. (Figure 5).

According to the requirements of the heritage strategy (Section 5.3) in AAP, the block shall be

consistent with other blocks, especially Block J on the southwest side (S.C.C., 2009). Therefore, the

floor number of buildings limit in the development plan is three floors. Besides, starting from the public

space strategy (Section 5.7), building a systematic public open space becomes another design

principle (Figure 6).

According to the statistics of building and site area indicators in the development proposal

(Tabel 1), the final building area is 9068.61m2, among which the reserved area is 124.50m2.

BUILDINGS AND SITE COVERAGE

Site Area 4676.74 (m2)

% of site

Coverage Land Use

Area (m2) by Level

0 1 2 All Levels

24.12% Hardstanding (Paving) 1127.89 1127.89

7.75% Grassed Area 362.28 362.28

5.13% Planted Area 240.00 240.00

5.19% Roads 242.83 242.83

15.83% Car Parking (Undercroft) 740.55 740.55

4.81% Car Parking (Surface) 225.00 225.00

0.89% Industrial Grallery (Refurb) 41.50 41.50 41.50 124.50

2.82% Industrial Grallery (New) 132.02 66.00 198.02

12.11% Offices 566.26 1746.78 1219.25 3532.29

0.00% Skills Training Centre (Offices) 638.42 638.42 1276.84

11.78% Industrial Workshop 550.87 550.87

9.57% Retail 447.54 447.54

100.00% Totals 4676.74 2492.70 1899.17 9068.61

Table 1. Building and Site Coverage of Block I Development Proposal.

Made by Author

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2. The Initial Financial Appraisal

2.1. Cost and Value Data

This scheme follows the principle of high-quality design, so it adopts the highest value in the selection

of cost and value data in the financial evaluation. According to the sustainable development strategy

(Section 5.1) of AAP and Sheffield City Centre Urban Design Compendium (S.C.C., 2004), the high-

quality design requirements should be followed to improve the quality of architectural design and

construction and ensure its durability. Moreover, Block I is defined as the industrial exhibition area in

this plan, which represents the high-standard and high-quality development principle of the industry

in Neepsend.

Secondly, in terms of function selection, in addition to filling in specific data according to the existing

function types in the evaluation form (Appendix 2), some other functions adopt the principle of

approximate function. For example, "Industrial Gallery (New)" cost takes "Art Gallery", while "Refurb"

takes "Refurb of Office type, modern to good quality". Furthermore, the report treats "Skill Training

Centre" as "Office".

2.2. Appraisal

After measuring the area indexes of various building and site in the original proposal and selecting

appropriate cost and value data, form the following tables:

• Land Costs (Table 2) calculate the land cost in the redevelopment of the whole site;

• Construction Costs (Table 3) calculate the cost of building and site on the site;

• Valuation (Table 4) calculate the value of buildings and sites; and

• Financial Appraisal (Table 5) combines other costs and calculate the final "Developer's Profit".

Land Costs

Land Value

Area Unit cost Total cost

m2 £s per m2 £s

Market price for redevelopment 4,677 286 £1,337,548

Table 2. Land Costs of Block I Development Proposal.

Made by Author

Construction Costs

Site works

Element Unit cost Area Total cost

£s per m2 m2 £s

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Abnormals & site preparation 100 4,637

Demolition 60 4,186

Grassed Area 7 362

Planted Area 20 240

High quality paving 50 1,128

Roads 55 243

463,654

251,160

2,536

4,800

56,395

13,356

Total cost of site works £791,900

Buildings

Element Unit cost Area Total cost

£s per m2 m2 £s

Car Parking (Undercroft) 168 741

Car Parking (Surface) 68 225

Industrial Grallery (Refurb) 570 125

Industrial Grallery (New) 1,020 198

Offices 1,100 3,532

Skill Training Centre 1,100 1,277

Industrial Workshop 700 551

Retail (Convenience) 560 448

124,412

15,300

70,965

201,980

3,885,519

1,404,524

385,609

250,622

Total cost of buildings £6,338,932

TOTAL CONSTRUCTION COSTS £7,130,832 Table 3. Construction Costs of Block I Development Proposal.

Made by Author

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2.3. Initial Proposal Evaluation

Finally, the Profit of Developer of Initial

Proposal is 20.22% (Table 5).

From the perspective of financial feasibility, its

profit slightly exceeds the acceptable profit

(15%-20%), which means that there is still

some room to improve the design effect of the

scheme, and the design standard could be

improved by sacrificing some rate of return, to

achieve the balance between design and

finance.

Table 5. Financial Appraisal of Block I Development Proposal.

Made by Author

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3. Design and Financial Viability

This section will adopt three design changes to the original design proposal to compare the

"Developer's Profit".

3.1. Development Density Adjustment

In principle, only the building density is adjusted in this adjustment scheme. As profit has exceeded

20%, a 10% reduction in building density is considered. It should be emphasised the area of the Listed

buildings is not regulated. The area comparison and profit after adjustment (Table 6) are as follows.

Table 6. Development Density Comparison of Block I Development Proposal.

Made by Author

By reducing the area of 10% of the buildings except for the listed buildings, the profit reduces

by 2.95%, and the final profit is 17.27%, which is within the range of acceptable profit, indicating

that it is feasible to adjust the development density.

3.2. Mix of Use Adjustment

Similarly, this scheme only focuses on the buildings. In order to ensure the same variables, the

adjustment amount is the same as the previous plan, namely, 10% of the total building area. By

observing the value to value/cost of single-category buildings (Appendix 2), it could find that the return

rate of "Retail" is the highest, followed by "Office" and "Workshop". However, "Retail" only accounts

for about 7% of the total floor space in the original proposal, and its influence is limited. Therefore, in

the "Mix of use" adjustment scheme, it will reduce "Office" area and increase "Workshop" area. The

comparison area and profit after adjustment (Table 7) are as follows.

10% of the total building area (613.00m2) will be transferred from "Office" to "Industrial

Workshop". "Developer's Profit" decreased by 4.89% to 15.33%, which is within the acceptable

range as a feasible solution.

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Table 7. Mix of Use Comparison of Block I Development Proposal.

Made by Author

3.3. Building Specification Adjustment

In this scheme, the price and cost of the entire development plan will be adjusted. Same as the above

schemes, the variable value is 10%. Variable B (C) increases (decreases) construction costs by 10%

to reflect higher (lower) building specifications and increases (decreases) price/rent by 10% to reflect

willingness by occupiers to pay proportionately more (lower) quality accommodation. The comparison

of the adjusted area profit is as follows (Table 8).

Through comparison, it could draw that Variable B adopted high building specifications, with

a profit of 21.90%, an increase of 1.68% compared with the original proposal. Variable C adopts

the method of reduction, and the profit is 18.23%, which is 1.99% lower. Therefore, Variable C

is financially feasible.

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Table 8. Building Specification Comparison of Block I Development Proposal.

Made by Author

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4. Balancing Design and Profitability Analysis

The profit of the current design is 20.22%, which is slightly higher than the acceptable profit. Therefore,

in balancing design and profitability analysis, it should consider the appropriate lower profit to improve

the design quality (Table 9).

For the development density, it is feasible to reduce the gross building area by 10% (profit: 17.27%),

appropriately increase the non-value space, such as green space, waterscape and hard landscape,

or consider building the underground car parking. It could not only improve the share of public space

but also increase the overall comfort of the space.

For mix of use, it is also feasible (profit: 15.33%) to build more workshops and reduce the proportion

of office (10%) to enhance the industrial atmosphere of the block and highlight the development vision.

It highlights the positioning of the original industrial functions of the block and reduces the migration

of the initial enterprises.

Cost and rent/price reduction (10%) is also acceptable (18.23%), which will make it easier for

developers to cope with market changes and reduce investment risk.

To sum up, from the perspective of design and financial feasibility, it recommends reducing

the development density (17.27%) to improve the design quality and the proportion of public

space and to be closer to the median acceptable rate of profit (17.50%).

Table 9. Comparative Analysis of Block I Development Proposal.

Made by Author

Reference List

Sheffield City Council., (2004). Sheffield City Centre Urban Design Compendium [online]. Sheffield:

the City Council [viewed 21 May 2020]. Available from:

https://web.archive.org/web/20141103030118/http://sccplugins.sheffield.gov.uk/urban_design/consul

tation.htm

Sheffield City Council., (2009). Sheffield Development Framework Core Strategy [online]. Sheffield:

the City Council [viewed 21 Mayl 2020]. Available from:

https://www.sheffield.gov.uk/content/dam/sheffield/docs/planning-and-

development/corestrategy/Core-Strategy---adopted-March-2009--pdf--6-55-MB-.pdf

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Appendix

Block I Existing Information Evaluation

Site Area Building

Height (Max.)

Existing Building

Area (Total)

Building

Density

Floor Area Ratio Land Use

4676.74 ㎡ 9.7m 4186.00 ㎡ 71.4% 0.9 Industry

This parcel is in bad shape (wedge), but it is in a critical position which is a lobby of Neepsend.

There is a vast difference between the east and the west in terms of building conditions and

development potential. In the future, it could be seen as a gateway to the region. Besides, the

listed building in the plot should be repaired to protected by making use of it, that will give a

proper value of the historic building.

Space Utilisation

The high building density and functional limitations result in almost no public space.

Existing Buildings

The quality of the building presents an imbalance between east and west, with the east lower

than the west. As can be seen from the satellite image, most of the building roofing in the west

has temporary renovation marks, and the quality is not high.

Characteristics

It is located in the industrial style area, especially the adjacent Block J, which is the next major

conservation and development area in Sheffield (S.C.C., 2009). However, compared with the

south side, the current architecture has the problem of uncoordinated style. As can be seen

from the satellite images, the temporary features of industrial buildings have serious negative

effects. The layout of the buildings in the plot is not uniformly planned, and the style is not

unified, which causes a great negative impact on the vision.

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Appendix 1. Block I Existing Information Evaluation.

Source: Google Map.

Appendix 2 (1). Development Costs and Values by Type of Construction (Indicative)

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Source: Neepsend Spreadsheet

Appendix 2 (2). Development Costs and Values by Type of Construction (Indicative)

Source: Neepsend Spreadsheet