High stakes: The regeneration of St James Quarter has garnered much support, but will the scheme’s proposed tower prove to be a sticking point with the city’s heritage bodies?
It is crunch time for Edinburgh retail. After three months of consultation, the £850m redevelopment of St James Quarter is set to face its toughest challenge yet. This month, owner Henderson Global Investors hopes to lodge an outline planning application with Edinburgh council.
Preservation bodies
So far, the council, keen to improve the beleaguered retail scene, has supported Henderson’s plans, which were triggered by a planning brief issued by the city council last year (see below). But how the city’s preservation bodies will feel about plans for a 850,000 sq ft shopping centre complete with “new, strong vertical features” slap bang within a UNESCO World Heritage site and a stone’s throw from the world-famous castle, is about to be officially tested.
Henderson bought the 450,000 sq ft centre in May last year, along with the adjoining 240,000 sq ft office block St James House, bringing ownership of the two together for the first time. It quickly announced plans to overhaul the tired 1960s structure, doubling the amount of retail space by putting in a crescent-shaped, multi-level galleria sweeping from the present Princes Street entrance to Multrees Walk.
John Lewis will continue to anchor the scheme, although Henderson says it is considering a second anchor. The developer hopes to be on site in 2010 and open by 2014.
The stakes are high. Edinburgh’s struggling retail market, beset by listed buildings and an awkward topography, has continued to slip down the UK’s rankings. Listed 24th by retail consultancy CACI, it sits below Brighton and Guildford. Despite a forecast increase of 5.5% in its catchment’s potential spend by 2015, CACI predicts that the city’s ranking will slip another place by that time.
And that is the good news. CACI’s figures assume that St James Quarter will get off the ground. Simon Power, managing consultant at CACI in Edinburgh, says that if, in the unlikely event, it failed to happen, the city will fall another two places.
Getting new retailers to commit to the city is hard. Jones Lang LaSalle director Niall Macdonald says Edinburgh’s market is patchy, with no improvement on last year’s mediocre performance. He adds: “You’ve got a difficult job on your hands to talk a retailer into a deal. This year is tough for the market.”
Princes Street remains prime pitch, attracting zone A rents of £220 per sq ft – a £5 per sq ft drop from 2007. With works for the city’s tram system churning up the road, rents are unlikely to recover this year. The much-maligned St James centre at its eastern end provides one of the few opportunities to develop. At present, it is a jumble of empty shops and value-orientated retailers, which make odd bedfellows with John Lewis. If it goes ahead, it will be the largest project in the capital for more than half a century.
Henderson has clearly been surprised by the level of attention the project has received. Senior portfolio manager Chris Pyne says there have been an “extraordinary amount” of visitors to its exhibition, and that the company has had to canvass a “horrific number” of stakeholders.
Stumbling block
The developer is reportedly nearing an agreement to move the Thistle hotel, which commands a key part of the site, and has been a stumbling block to running the tram close to the scheme.
One other sticking point is Henderson’s plan to increase the height of the centre. Some agents say this could affect views from the castle and inflame heritage bodies. To make matters worse, Edinburgh council seems to be keen to push the boundaries, and has asked Henderson to include plans for a tower.
Pyne is keen to put this inclusion into context: “We have not pulled these proposals out of thin air. This is something we were asked to do.” Pyne says feedback from concerned parties, has, as expected, been mixed.
Jonathan Guthrie, director of development at Edinburgh council, says the idea is to give the scheme some presence and an identity. “There are tall buildings on the site, and we’d look for some to be scaled back.”
He admits that even the mention of a tall building will be controversial. “The word tower is such an emotive term, and it would have to be appropriate to the surroundings,” he says. “We are not talking about a 50-storey tower.”
But Henderson, perhaps worried that its wider and largely supported plans might get held up in controversy over a tower, is playing it safe by submitting a parallel application for the tall building. Pyne says: “The holding costs associated with the site are significant, and we want to crack on. If the planning application is refused, and we have to reapply, then the proposal starts to falter.”
Henderson may also have one eye on the time that ING’s 60,000 sq ft retail scheme in St Andrews Square took to get through planning. As number six in the council’s String of Pearls – the seven buildings up for regeneration along Princes Street – planning approval by the council’s own admission took a “wee bit longer” than anticipated. The council says it is now comfortable with the process, and that pearl number seven, St James, should be more straightforward.
In the property industry, the redevelopment of St James Quarter is seen as the great hope to improve the city. So it is perhaps surprising that Pyne is the one to warn against pinning too much on one scheme. “There are no quick or easy wins in Edinburgh,” he says. “And St James can’t be the answer to all of Edinburgh’s woes.”
Council’s hopes for ‘string of pearls’
Outside of St James, the city council has plans to improve Princes Street. It is consulting on its draft City Centre Princes Street Development Framework, which outlines the redevelopment of the street’s listed buildings in blocks like a “string of pearls”, each different and with its own identity.
But this is unlikely to pique developers’ interest, unless the council relaxes its planning controls on the listed buildings, say agents. “Look at 121-124 Princes Street,” says Claire Leven at GVA Grimley. “That is Grade A listed and it is lying empty. It has had short-term tenants in it for the past five years. Princes Street is a mishmash of buildings, all of different heights and styles, that gets wrapped in this romantic view that they are all wonderful historic buildings, and they aren’t.”
The problem is that the council, while suggesting good alternatives, does not control the property, and getting all the landlords to agree to changes is never easy. The same goes for the bid to get the upper floors of Princes Street back into use.
Some property players point out that, if a building is listed, landlords will have to provide access by carving out space from the ground-floor shops, where they are getting the highest rents.
The council acknowledges these problems, but says that without change there is little prospect of an increase in rents or yields.
“It is only by working together that we can improve things,” says Jonathan Guthrie, development director at Edinburgh council. “Through public realm improvements, we are looking at improving the quality of the environment of the rear entrances. So far, we’ve contacted 95% of stakeholders, and not one has dug in their heels and said no.”
By June, the council will issue indications of its priorities for Princes Street. The property industry waits with bated breath.
