Despite Edinburgh’s cultural richness its retail portfolio has long been in the shadow of its neighbour Glasgow. Now an overhaul of its most unattractive scheme is set to give the city the offer it deserves. By Ben Cooper

It may be Scotland’s capital, but in the shopping stakes it comes a poor second to Glasgow. All this may change if Henderson gets its way.

The intention is to knock down the St James shopping centre – a site consistently labelled Scotland’s ugliest building – and redevelop it into a prime retail destination with the new name of St James Quarter.

And with another big scheme just having been given the go-ahead in the city and a third preparing to submit its application (see box), it is clear that retail is playing a strong part in transforming the Scottish capital. By the time these grand plans are complete, it will be a very different place.

St James Quarter architect Allan Murray says: “It’s a unique opportunity to redress some of the problems that have bedraggled the area for a number of decades and propel Edinburgh’s retail environment into the 21st century.”

Edinburgh has a lot going for it. It has an abundance of wealthy local residents, is one of the most visited destinations in Scotland for UK and overseas tourists and is one of Britain’s top tourist pulls. In addition, it has a strong financial sector – most of Britain’s biggest banks and financial institutions have a presence in the capital – and a rich cultural heritage. And its proudest cultural landmark, the world-famous Edinburgh Festival, does more than bring in the crowds; it delivers a tremendous economic boost to the retail sector almost on the scale of Christmas.

For local retailers the festival makes Edinburgh particularly appealing. Harvey Nichols Edinburgh general manager Gordon Drummond says: “During August we get a large influx of visitors. Most cities in the UK have a decrease in trade in August as people go on holiday. Edinburgh increases for the festival. We actually have two peaks during the year. We buck the trend of most cities during the summer.”

If there’s one thing that retailers don’t want to see it is a wealthy catchment going to waste, and Edinburgh doesn’t attract either the shoppers or the retailers that it could. The city is hardly bereft of retail, but it’s not living up to its potential either.

The existing retail offer revolves around two main centres – Princes Street and George Street. The two are very distinct entities. The instantly recognisable Princes Street – the iconic pathway between the new and old towns running alongside Edinburgh Castle – has inevitably fallen into the hands of retailers seeking to cash in on tourism, particularly at its western end.

George Street is an altogether more chic package. With Brooks Brothers, Phase Eight, Cath Kidston and a string of upmarket fashion jewellers including Laing, it is home to Edinburgh’s more sophisticated retail offering. Savills head of in-town for Scotland Ross Allardice says: “Where Edinburgh seems to be thriving is on George Street. It has something there that Glasgow doesn’t offer.”

However, the general consensus is that Princes Street needs to shape up. “On Princes Street because of the many different ownerships it’s attracted the tacky tourist shops,” explains Allardice. “It doesn’t give a particularly good impression about the city.”

And its most unique feature – the fact that it is a one-sided street – has placed further limitations on its retail offer. The street has recently lost Zavvi, which decided to pull out because the high rents it was paying weren’t being reflected in sales.

What both Princes Street and George Street do have in common is the fact that they are adjacent to St James shopping centre. It would be difficult to find a local who doesn’t want to see the back of this centre. As Drummond says: “It’s a total eyesore. Nobody has any fond words to say about it.”

A typical closed-box design from the 1970s, St James is not only unattractive, it is also causing major blockage in terms of footfall flow because shoppers have to walk around the site to access other areas of the city centre.

Henderson Shopping Centre fund manager Myles White agrees with Drummond. “St James is a horrible concrete structure from the early 1970s that is often voted Scotland’s ugliest building. It sits fairly and squarely in the city centre of Edinburgh,” he says.

While it does have one big asset – John Lewis – White says the tenant mix in the rest of the centre has let it down. “It’s the only place I can think of where the shops in the mall are completely different from John Lewis. What John Lewis wanted to see was a larger mall that was more in keeping with its customers,” he explains.

Setting the tone

John Lewis is, therefore, particularly pleased with the plans for St James Quarter. John Lewis head of retail development Jeremy Collins says it will “create one of the best concentrations of quality retail in the UK” and that, together with Henderson and the council, it is “committed to bringing the vision to reality”.

White says the aim of the redeveloped site is to raise the level of the capital’s retail offer. “Edinburgh has an affluent average catchment. It’s a large tourist market and has a large financial services element, but it has a poor retail offering. There isn’t a single retail destination that brings the type and quality of shops that the city needs,” he explains. “Glasgow is exceptionally strong and will continue to be strong. It will take a lot to knock it off its spot. But Edinburgh should be holding its own rather than being a poor relation of Glasgow.”

Everything but John Lewis will be pulled down if the plans are given the final go-ahead, while the department store’s anchor unit will be reconfigured. The works will create a three-tier, crescent-shaped shopping galleria that will double the retail space in the scheme. In addition, 250 residential units and a hotel will be built, and 161,465 sq ft (15,000 sq m) of office space created.

Outside, a number of new streets, public squares and walkways have been designed with the intention of keeping both pedestrians and traffic flowing around the city centre. Murray says: “When we sat down to design St James Quarter, we asked ourselves: ‘How do we create a connection that goes through the site that you can walk through?’ The idea was that we connect lots of different parts of the city.”

Rarely is a new scheme met with such approval before an application has been signed off. There will be no love lost if the demolition of the existing St James Centre goes ahead and its replacement will be much heralded by existing retailers in Edinburgh.

Tony Hatch, property director of Bhs, which has three stores in and around Edinburgh, says: “We’re in favour of the new developments in Edinburgh. Between it and Glasgow it’s become the lesser of the two retail centres and it does need a bit more critical mass.”

The developments in Edinburgh are long overdue. St James Quarter isn’t scheduled to be completed until 2016, whereas this year some of the UK’s largest and most important cities – such as Bristol and Liverpool – have been transformed by retail-led developments. A vibrant retail scene is the one thing missing in Scotland’s capital. For residents and retailers alike, the wait will be worth it.

Since we last visited…

In addition to St James Quarter, Edinburgh is getting Caltongate – a£300 million mixed-use scheme that will include a five-star hotel, retail and leisure facilities, a new conference centre and a residential element. Owned by Mountgrange, Caltongate was given approval at the end of last month and will be completed by 2012.

Edinburgh’s retail offer is also going to be bolstered by Stockland’s St Andrews Square just north of Princes Street, which is being redeveloped and is due to be completed by 2012. The scheme, which occupies a 92,000 sq ft (8,545 sq m) building, will bring an extra 65,000 sq ft (6,040 sq m) of retail. Culverwell is letting agent on the project.

Elsewhere in Scotland, the latest development to be completed is the£50 million extension to the Kingsgate shopping centre in Dunfermline. The extension opened last month, bringing 27 new retailers to the city, including a Debenhams, which has taken a 70,000 sq ft (6,505 sq m) department store. The scheme is being let by Eric Young & Co and Cushman & Wakefield.