The developers behind the new Edinburgh St James shopping centre believe that once completed, the scheme will put the city’s retail offering on the world stage. Retail Week explores how the scheme is playing a part in a wider realignment of the city’s traditional retail hubs.

Edinburgh St James

Edinburgh St James is due to be completed in 2021

Retail Week visited the new Edinburgh St James location in the Scottish capital’s east end, which is slated to open in autumn next year.

The shopping centre will comprise 850,000 sq ft of designated retail space, as well as 30 food and beverage businesses and an Everyman cinema which will open in 2020. The scheme will be fully operational by the end of 2021, when the 152 residential apartments and the W Hotel open.

The developers behind the project, Nuveen, say that the scheme will “strengthen Edinburgh’s global standing” and “completely redefine retail-led, mixed-use regeneration in the UK, repositioning Edinburgh as one of the most exciting, forward-thinking and sought-after destinations for retail and leisure operators in Europe”.

Big claims, particularly considering the declining footfall and customer spending figures across shopping centres in the UK more generally over the past few years.

It is also due to come online at a time when Edinburgh’s traditional retail hubs are struggling with the same high street travails as much of the rest of UK retail.

A tale of two cities

The traditional retail hub of Edinburgh has been the mile-long thoroughfare of Princes Street, which runs past the main transport hub of Waverley Station, and some of its major tourist attractions such as Edinburgh Castle.

Princes Street was the heartland of retail in the city and the surrounding streets – such as George Street, Queen Street, St Andrew Square and Multrees Walk – subsequently developed strong retail offerings of their own. 

The new St James centre’s impending launch is accelerating a trend that is already being seen in the city – retailers packing up from the western end of Princes Street and moving east.

Global head of restructuring for the UK at KPMG and Edinburgh resident Blair Nimmo explains: “In the last maybe four or five years, you’ve seen a lot of retailers moving from the west end of Princes Street to the east end.

“The big store in the west end used to be the House of Fraser and that’s closed. It’s being turned into a Diageo whisky experience – a museum-cum-bar. It’s all moving down towards the eastside, around St Andrew Square.”

In response to retailers vacating the west end of Princes Street, and for the first time in living memory, the city council has opened a public consultation on its plans to change planning guidance on the road to allow food and beverage operators to take space.

Diageo’s flagship Johnnie Walker ‘visitor experience’ epitomises the changing nature of the street’s historical tenant mix: food and drink and leisure occupiers filling voids previously held by retailers. 

St James director of development Martin Perry says that he sees the St James centre as “completing the retail circle” in Edinburgh and is bullish about its prospects because of its location in the middle of the city’s new retail heart. “We’ve been exploring what the future of retail is and what we feel that it should look like, and this is going to be it.”

Zara Edinburgh

Zara is one of the fashion retailers moving to the new development

A number of high street fashion staples such as Zara and Next have already taken space in the St James development and served notice on previous flagship stores along Princes Street. 

Senior director on the advisory and transaction services team at CBRE, Kevin Sims, says the completed scheme will accelerate the rebalancing of the retail offering on the surrounding streets. 

“There will be a repositioning, that we’re already seeing now. Naturally, the west end will come under the most pressure as many of the fashion operators there will be looking to move into the centre. There’s a huge oversupply [in the west end], so there will be repositioning, there will be some voids,” he says.

“In my view, that’s where the planners will play an important role in being a little more flexible and people will want to look at redevelopments of full buildings – Zara and Next hold leases on full buildings and you’re unlikely to find retailers wanting to take those on entirely.”

According to head of retail consultancy at Harper Dennis Hobbs, Jonathan De Mello, the issues affecting the west end of Princes Street are also being exacerbated by the success of the city’s more premium retail offerings on nearby George Street.

“Princes Street’s weakness is that George Street is coming up so much,” he says. “It used to be one massive long street, where Princes Street was really strong, but now it’s more like a rectangle – with George Street, Princes Street and the streets that link it.

“The western end of Princes Street and George Street are eroding.”

A strength and a weakness

St James’ Perry is excited about the possibilities that Edinburgh’s ever-burgeoning reputation as a tourism destination will have for the centre. He says that in 2017, more than 13 million people came through Edinburgh airport. By 2022 that number is estimated to double to more than 26 million.

With the centre due to be situated on a tram line that runs directly to and from the airport, and in an area surrounded by numerous hotels, Perry believes retailers on the scheme are bound to benefit from the resulting increased footfall.

“Tourists, by their nature, are good shoppers because they aren’t so internet-orientated”

Martin Perry, St James

“Tourists, by their nature, are good shoppers because they aren’t so internet-orientated,” he says. “They’ve come to the city for a holiday with money in their pockets. They are unlikely to go back to their hotel and shop online – much less so anyway than a resident of the city.”

Yet, for some, the great strength of the city and the driving force behind the tourism – its heritage-listed Georgian buildings – is also one of its biggest weaknesses when it comes to the retail offering, as Nimmo explains.

“The beauty of the city is its old Georgian architecture. The downside is that it’s often not modern standard-compliant, certainly not for offices or for retailers,” Nimmo says.

De Mello agrees, pointing to the existing John Lewis building that stands next to the St James site. While the building itself is not Georgian, it is still much older than many of the retailer’s wider portfolio and De Mello says performance has suffered because of that.

“It’s one of the weakest John Lewis’ in its portfolio. Partly it’s due to the configuration, but it’s poorly organised internally – not because of John Lewis, but because of the historic building.”

The heritage buildings also present problems for developers, according to head of policy and external affairs at the Scottish Retail Consortium, Ewan MacDonald-Russell.

“In Scotland, we have particular challenges around building warrants because more of the buildings are significantly older than in other places in the UK. It’s great that these old buildings are here, but it does mean restrictions can be different and take longer to get things built,” he says.

St James Square Edinburgh

The W Hotel at St James Square

New opportunities

The new scheme will also bring the city some much needed modern, state-of-the-art retail stock.

The east end of Princes Street is already home to the Waverley Mall, but it opened in 1984 and has only 85,400 sq ft of retail space spread over three floors. Fairly paltry compared to St James’ 850,000 sq ft-plus of retail space, boasting 85 bespoke units across five floors.

“At the moment you’ve got a lot of historic and badly configured retail buildings [in the city], so providing purpose-built stock for retailers is certainly attractive,” says De Mello. “It’s definitely going to improve retail in Edinburgh. It’s a city that desperately needs new retail stock and high-quality stock at that.”

Sims agrees, and says he can envisage rents on Princes Street “becoming compromised when the scheme is finished, because St James will become 100% prime – the environment is too good, the cluster of tenants they are doing deals with will be very strong and it’ll be the premium, prime fashion location in Edinburgh city centre”. 

Nimmo says the extent to which the scheme proves to be a boon for neighbouring retail hubs depends on what sort of names its leasing teams want to bring on board.

That will ”determine what gets affected worst,” he says. “It depends where it’s going to target – the high-end or more value-end brands.”

Perry is adamant the scheme will offer shoppers a mix of both high street staples as well as premium brands. Fifteen months out from opening, the scheme is 60% let, with a further 15% of space at the legal contract stage, and another 10% under multiple offers.

While he won’t be drawn on names, Perry promises that some occupiers will be “international retailers that aren’t currently in Scotland”. 

With big-name brands, fresh retail stock and a prime location in the heart of one of the UK’s more affluent cities, Edinburgh St James looks set to be a success. Its effect on Princes Street will be transformative, but – as with high streets up and down the UK – change isn’t always a bad thing.