Scotland’s two largest cities are planning retail expansions that will help reshape their offer, yet they are coming from different starting points
It would not be hard to make a case for Edinburgh as the UK city punching the furthest below its retail weight. While nearby Glasgow ranks second in the UK for its retail and leisure offer (see below), Edinburgh languishes at 13th in the same CACI retail rankings.
Within five years TIAA Henderson Real Estate hopes to change all that and catapult the city up to seventh place with an £850m scheme to remodel and redevelop a 10-acre site at the eastern end of Princes Street. Currently occupied by the John Lewis-anchored St James Centre, much of what sits there today will be cleared to create space for a mixed-use, retail-led St James Quarter scheme.
It will utilise the existing John Lewis but will also include homes, a hotel and lots of leisure. It is expected to complete in late 2019 or early 2020.
“If anywhere needed a new scheme, it’s Edinburgh. Princes Street is very unusual, with a single-sided pitch and few buildings suitable for large flagships. On top of that, it lacks a central dining district, yet the potential is there for all to see, with a large domestic catchment and a huge number of tourists,” says Kevin Sims, senior director, retail, Scotland at CBRE.
With the scheme edging closer to construction, the impact is already being felt. Rents on Princes Street are reaching £200 per sq ft for the first time in a long while as retailers jostle for the best spots.
Sims says: “Even before the scheme has started, we can see a shifting of retailers as they look to position themselves ready for when St James opens. I think the west end of Princes Street will become more value-led, while with the opening of the Apple store, we are also seeing fashion retailers locating so that they are at the heart of the action.”
Martin Perry, director of development at TIAA Henderson Real Estate, adds that the city has paid for a lengthy period in limbo, during which time its retail provision has failed to live up to expectations.
“The issue for Edinburgh is that it is a top 10 UK city without a major shopping centre in or near the city. So for us there is an opportunity to do something that is an awful lot better than the current situation with a 10-acre site already anchored by John Lewis,” he says.
Keeping John Lewis company, it is hoped, will be a mix of independent, boutique, high street and aspirational retailers, says Perry. TH Real Estate is already in negotiations with a number of existing tenants about their return to the scheme.
The lack of retail space in Edinburgh has long frustrated retailers, so it is no surprise that there is a long list of potential retailers keen to get a presence in the city, such as Zara Home, Massimo Dutti, Laings the Jewellers and Mappin Webb.
In addition, the new centre will include around 30 food and beverage units ranging from fast food to family and restaurant dining spread over a number of food court locations. Like retailers, there is a long list of food operators trying to find space in Edinburgh. Names thought to be in the market include Iberica, Thaikhun, Carluccio’s, The Big Easy and Burger and Lobster.
Signs are good that in five years’ time Edinburgh will finally be able to enter the UK’s retail ring and deliver a knockout blow.
Glasgow consolidates its lead
Glasgow is a shopping city. It ranks number two in the UK for retail offer, according to CACI, behind London’s West End. But it has plans that should consolidate its position.
Land Securities has secured consent to more than double the size of its John Lewis-anchored Buchanan Galleries shopping centre to 1.2m sq ft. LandSec bought out partner TIAA Henderson Real Estate in October 2014 and the extension is due to complete in spring 2018.
Showcase Cinema de Lux, Marks & Spencer, Superdry, Mango, Next (large extension) and D&D London are among those to have committed. Leasing director John Grimes says: “Securing such high-profile tenants at this early stage of the development process demonstrates the demand for the very best retail space in Glasgow’s famous shopping district.”
Kevin Sims, senior director, retail, Scotland at CBRE, adds: “The extension of Buchanan Galleries is really about forward thinking. The works will create modern, large units and create a much-needed controlled dining area. It will influence flow and we are likely to see some repositioning around the city.”
On a smaller scale, the Sauchiehall Centre is also to be revamped. Quadrant Estates founding partner Christopher Daniel says: “It is on the edge of prime in Glasgow and it is unusual to be able to pick up a large block on a city centre high street. We bought at a yield of 7.7% and on the whole it is well let, with Primark and TK Maxx among the tenants. But there is a vacant unit and an unattractive basement and we intend to improve the aesthetics and, not surprisingly, we are talking to the local authority about varying the uses of the units so that we can bring in a restaurant offer.”
Small units on prime Buchanan Street have been commanding rents of £260 per sq ft zone A and it is understood that there is a potential deal that will exceed that.
