NEW plans for the huge £850m St James Quarter development will be revealed today, creating a shoppers’ paradise in the heart of Edinburgh.
The new commercial district will rise from the debris of the eyesore St James Centre – which is slated for demolition.
Boasting 42,500 square metres of shopping space over three sweeping crescent-shaped levels, the development will also include a swathe of premium office space, an apart-hotel, a theatre and 138 flats with spectacular views. A central pillar of the £850 million masterplan is a huge upmarket hotel – one of two stellar resorts featured in designs – capped with a glass ceiling that is likely to house a roof-top restaurant with spectacular panoramic vistas.
The unparalleled investment will see Edinburgh’s flagging sales sector transformed into a formidable retail force which could see the city overtake Glasgow as Scotland’s shopping heartland.
Five major buildings dominate the new “St James Quarter”, but alfresco and glazed-roof shopping precincts will divide up the development which also contain three substantial public spaces and a square.
With the St James Centre gone, retail space in its replacement will nearly double.
Surrounding areas such as Leith Street, Little King Street and Picardy Place are set for major facelifts including creation of a public transport interchange.
The John Lewis building will remain untouched despite construction work which is due to start next year, running until 2021.
It is thought the landmark project will support 2,300 permanent jobs and add £25m to the Scottish economy each year.
And as part of the project, a retail and hospitality training academy will be set up to host around 1000 placements each year with a focus on helping “long-term unemployed and disadvantaged young people”.
Council leader Andrew Burns hailed the long-awaited move as “a red letter day for Edinburgh city centre”. “This is a game-changer,” he said. “There is no doubt that in almost every economic arena Edinburgh punches above its weight but the one area where it could do better is in its retail offer. I’m entirely confident that this St James Quarter – as it will be known – will draw us up to comparable status with our major competitors and that has got to be extremely good news.”
Cllr Burns said in the 20 years since he moved to the Capital he has never seen development “of this scale” which, he said, would “completely transform the city centre”.
Essential Edinburgh chairman Andy Neal said the new retail district was a “fantastic opportunity” to “leapfrog” Glasgow and become “the pre-eminent shopping destination in central Scotland”.
“Everything that’s going to happen with the St James Quarter is exactly as it should be and exactly what you would want to see. But it’s not just shops, there is a tremendous mix including restaurants, hotels and a cinema.
“It’s right next to Multrees Walk, which is doing really well, by delivering those top-end products.
“There will be a step up in retail offer but, from my point of view, it’s retail plus a great experience.”
However, Mr Neal warned against neglecting the city’s West End in the excitement of the St James Quarter announcement.
“The other side of Princes Street has been a traditionally strong retail area and it needs to evolve at the same time as the St James Quarter establishes itself.”
On the political front, the huge injection of investment in Edinburgh will be considered a shot in the arm for pro-independence campaigners after several businesses, including insurer Standard Life, hinted they may leave Scotland in the event of a Yes vote in September’s referendum.
Deputy First Minister Nicola Sturgeon said the development would “boost the Scottish economy” but was only possible through a pioneering funding model called “regeneration accelerator model” (RAM), where Holyrood provides loans based on estimated future income from business rates.
Ms Sturgeon said: “This government is determined to invest in Scotland’s infrastructure – both to stimulate growth in the short term and lay the foundations for long-term success. Through schemes such as RAM we are increasing public investment in infrastructure across Scotland, which will create overall gains for the economy as a whole.”
Martin Perry, director of development at TIAA Henderson Real Estate, said they have been working with the council and the Scottish Government to see the dream brought to life.
He said securing funding demonstrates “confidence in Edinburgh as a leading European city”.
In 2013 a report by global investment firm Jones Lang LaSalle revealed just 46 out of 250 key international retailers had a presence in Edinburgh.
But the St James Quarter is expected to reverse the Capital’s fortunes – enticing some of the world’s most illustrious designer stores and brands.
Among the anticipated arrivals are: Abercrombie and Fitch, Banana Republic, Kenneth Cole, Nike, Muji, J Crew, Ted Baker, Tom Ford, Sephora, True Religion and 7 for All Mankind.
By David Birrell, Chief executive of Chamber of Commerce
We’ve seen a strong performance from retailers over the past few years in difficult conditions and t this development shows the confidence that Edinburgh is a city that can deliver, and has something for everyone from high-end fashion to small, boutique shops.
Edinburgh has a high level of tourist trade and it is important as part of our position as a festival city that we also develop leading “retailtainment” facilities.
In the last decade the edges of traditional shopping and entertainment have become blurred as restaurants and other leisure uses sit together with retail outlets. This holistic approach can build character for potential shoppers.
There is a clear opportunity for existing and prospective businesses to make the most of these changes.
Pioneering finance model at work
A TRAILBLAZING finance package has been agreed to kick-start investment in the St James Quarter – a development which had stalled since 2009 amid economic uncertainty.
The deal sees a £61 million Scottish Government stake injected into a cash pot dominated by private firm TIAA Henderson Real Estate, which owns the site and has held planning permission for development since 2009.
Dubbed a “regeneration accelerator model”, the deal would see the government claw back around £270m over 25 years from enhanced business rates as a result of the development.
The public money will be used to improve infrastructure to support construction of the Quarter.
The proposed deal is similar to the finance stream used to develop Glasgow’s Buchanan Galleries, which saw the city council borrow £80m towards the £390m regeneration project.
The money, borrowed against projected rises in business rates in a scheme dubbed “tax incremental financing”, was used to lever an extra £310m for the Buchanan Quarter project to revamp George Square and the Buchanan Galleries shopping centre.
Under the terms, the bulk of the risk associated with construction lies with TIAA Henderson.
A report into the project reveals “but for” public sector support, “the prospect of redeveloping the St James Quarter would be lost indefinitely”.
The finance model was developed in the US and pioneered over there but is “still fairly rare over here”, according to the Edinburgh Institute business school at Napier University.
“It allows the public sector to forecast future revenue from a development and take that revenue now from the Scottish Government in order to invest in the public infrastructure that is required before the private developer will proceed,” they said.
1965: The houses in and around St James’ Square, near the top of Leith Walk, are demolished and plans for the St James Centre, New St Andrew’s House and King James Hotel are revealed.
1973: The St James Centre is completed, replacing St James Square, which was originally laid out by James Craig in the late 18th century. All that remains is St Mary’s Cathedral.
2002: The centre polls 34 per cent of the vote in a survey carried out by The Scotsman to identify the worst architectural eyesore in Scotland.
2003: A poll, conducted UK-wide by Country Life magazine, puts the shopping centre within its readers’ top ten most disliked buildings.
2005: St James’ Centre is put on the market by its owner, Coal Pension Properties, in October.
2006: Henderson Global Investment (HGI) snaps up the St James Centre and New St James House, the former Scottish Office HQ.
2008: First plans for how a new “St James Quarter” would look are unveiled, with a promised completion date of 2015.
2009: Planning permission given for £850 million development on a 13-acre site. Only the John Lewis store will be retained.
2010: Plans for the development are scaled back to drop office blocks, while the number of homes is set to be halved to around 125. Finish date is put back to 2016, but detailed plans are promised in 2011.
May 2011: Demolition work is put back until 2012 at the earliest, but the developers insist that the project can be finished by 2016.
November 2011: New delays emerge as it is revealed that a deal to relocate an existing hotel has collapsed.
May 2012: It emerges that the development is still on hold, with the city council yet to receive detailed plans for the project. The council insists Henderson is still committed to the site.
September 2013: HGI notifies city planning chiefs of its intention to revisit the idea in a move hailed as “a clear signal of economic confidence” returning to the Capital. A proposal of application notice is lodged to build a hotel on the Picardy Place roundabout – the first stage in a bid to kick-start the £850m overhaul.
October 2013: John Lewis confirms it will stay open if and when the revamp gets the go-ahead.
December 2013: Plans are confirmed to create a new “retail academy” as part of any development. The city council and Henderson Global agree that the academy will be established at an early stage of any redevelopment and that jobs will be actively promoted in Leith and north-east Edinburgh.
April 2014: Funding is put in place to bring about the long-awaited transformation of the centre.