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Latest review of Edinburgh's retail market

13th February 2017

Edinburgh city centre continues to be a dynamic prime location for the retail and leisure markets. The city will benefit from the development of one of the UK’s few major new destinations, in the form of Edinburgh St James, while the wider city centre continues to attract investment from premier brands.

At a national level, retail market conditions are challenging. Retail sales in Scotland softened to a year-on-year decline of -1.5% in November 2016. Over the same period meanwhile, non-food on line sales increased by 7.2% (source: SRC). Early reports at the time of writing suggest that some retailers enjoyed a decent Christmas trading period, particularly major foodstores, but there are concerns that rising inflation in 2017 will increasingly provide a headwind to retail sales growth.

Demolition of the existing St James Centre is now underway. Plans for TH Real Estate’s £850 million new centre include 85 shops, 20 restaurants, Scotland’s first 214-bedroom W Hotel, along with 150 apartments. Pre-lets have been agreed with Next for a flagship store and Everyman Cinemas for a boutique 5-screen cinema. John Lewis continues to trade during development works. The developer proposes that the redeveloped centre will promote Edinburgh’s ranking among UK retail centres, to 8th.  

The city centre has seen some retail closures recently, including USC, HMV, Austin Reed, Build-a-Bear, and the high profile BHS closure on Princes Street. Demonstrating the city’s commercial resilience however, most of these units have been re-occupied, while there are major redevelopment proposals for the BHS store by owners LaSalle Investment Management which include retail units, a hotel and a roof-top restaurant.

Princes Street has also seen positive market activity over the past year, including Foot Locker moving to number 10-15, while Ann Summers relocated to its former unit at 87 Princes Street. Stationer Smiggle opened a store at number 42a and jeweller Chisholm Hunter opened a flagship store in the former USC unit at number 97-98. At 119 Princes Street, jeweller H Samuel opened a flagship store (in the former Build-A-Bear unit) on a high rental value of £216 per sq.ft. Zone A (the front ground floor sales area of the shop) and a 15-year lease. Further west in the same block, Sports Direct has acquired the HMV store at number 129-130 and has very recently opened a store here.

On Rose Street, Danish furniture retailer, BoConcept, opened a store.  A Jessops flagship photography store opened in the former Ted & Muffy footwear shop on Castle Street. Shoe retailer The Brogue Trader opened on Frederick Street.

Due to the redevelopment of the St James Centre, Boots opened a store on Multrees Walk.

On George Street, clothing retailer Joules relocated from number 27 to a larger store at number 85, while make-up retailer Bobbi Brown opened at number 37b and Aspinal of London opened a luxury leather store at number 43. However there were closures by Waterstones bookshop at number 83, which has reduced its city centre presence from three stores in 2010 to one refurbished flagship store on Princes Street now, and clothing retailers Austin Reed and Viyella at number 102/104.

Within Waverley Mall, stationer Flying Tiger opened, alongwith Eurochange currency exchange.

Diversification and re-investment to create complementary leisure uses in the city centre continued during 2016, including some brands new to Scotland. This positive trend adds different sources of expenditure and increases dwell-time and business hours for residents, visitors and city centre workers.

Recent hotel openings include the 240-bedroom Mariott Courtyard Edinburgh next to the Edinburgh Playhouse; a 121-bedroom Hub by Premier Inn and 127-bedroom Premier Inn both on the Royal Mile; a 146-bedroom Adagio Aparthotel also on the Royal Mile; a 127-bedroom Premier Inn on York Place; Sleeperz expansion of its Cityroomz hotel on Shandwick Place with an additional 43 bedrooms; and a 64-bedroom Hotel Indigo on Princes Street.  

In Standard Life Investments’ and Peveril Securities’ new development on St Andrews Square restaurants Dishoom and Drake & Morgan have opened, in addition restaurants Wagamama and Iberica plan to open in summer 2017.  Retailer TK Maxx opened its store within this development in August 2016.

The Mexican food restaurant chain, Wahaca, opened its first restaurant in Scotland at 16 South St Andrew Street, while DiMaggios plans to open a restaurant in the former Royal Bank of Scotland building on St Andrews Square, The Registers, which is currently undergoing redevelopment by the Chris Stewart Group.

French brasserie, Cote, opened on Frederick Street and on Castle Street Badger & Co opened.

In the prime property investment market, recent city centre transactions include the sale of the 18,580 sq.m. leisure complex the Omni Centre to TH Real Estate – the developer of the neighbouring Edinburgh St James - for over £75 million.  140/141 Princes Street, let to Tesco Stores, was sold to Whinstane LLP for £2.55 million. The Waverley Mall Shopping Centre is also currently marketed for sale by Catalyst Capital for £23.4 million.

In the wider city retail market, at Ocean Terminal in Leith H & M has relocated to a larger unit and HMV opened in its former unit (relocating from Princes Street). Poundworld also opened a store here while BHS closed its store. The centre owners, Resolution Property, have placed it on the market with an asking price of £85 million.

On the edge of the city at Newcraighall, furniture retailers Dwell opened at Milton Link and Oak Furniture Land opened at Fort Kinnaird.

The table highlights trend in leading retail market indicators for Edinburgh city centre since 2010. The ranking based on turnover has been between 15th and 12th in the UK, on a generally improving trend; as noted a stated aim of Edinburgh St James is to drive the city to 8th in the UK on this measure. The city centre vacancy rate has fallen from around 8% to 9%. Prime rents show a sharp increase following a protracted flat period since the 2008/09 recession (although off Princes Street some locations such as George Street still had growing rents).

Rental change will be captured in new non-domestic rates bills from April 2017; a review of draft revaluation data suggests that more Edinburgh retail properties will have rates increases than decreases, while those with rateable values over £51,000 will pay the higher rate of 49.2p in the pound rather than the standard UBR of 46.6p. When Valuation Notices are issued in April, ratepayers will have 6 months to make an appeal. Visit Ryden's business rates section for more information and a comprehensive guide to the Revaluation.  

Categories Blog Research

Mark Robertson

Mark is Edinburgh Regional Managing Partner and provides an external consultancy service to clients and internal advice to Ryden. He is the leading research authority on Scotland's property markets and has completed more than three hundred property consultancy projects for public and private sector clients over the past 20 years.

Mark's experience includes property market research, economic and market analysis, options appraisals and funding studies. He is editor of the authoritative Scottish Property Review.

External Tutor, Property Investment Appraisal (MSc), Napier University

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FRICS and contribution to RICS Scotland policy forums

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