As the ambitious redevelopment of the St James Centre is put on hold, Charles Guest examines the status of Edinburgh’s ‘black holes’
Henderson Global Investors’ redevelopment of the St James Shopping Centre has been put on hold and it begs the question as to the future of what in property parlance are often referred to as “black holes” – those sites or buildings within the city centre which are lying vacant and awaiting redevelopment.
At the best of times property development in a highly conserved city such as Edinburgh where cognisance must be taken of the historic fabric has always been a slow process.
A number of major black holes were caught up in the worst property crash in decades, with banks unwilling or unable to lend and values which have plummeted. There has been a substantial hiatus in the development of the city centre.
Two exceptions to this are the city council’s major office development in Morrison Street, which is linked to the extension of the Edinburgh International Conference Centre, and the SoCo site in the Old Town, where a 259-bed hotel and adjoining retail are about to go on-site.
With development of office buildings difficult to fund without pre-lets, and large-scale residential development restrained by the dearth of affordable mortgage finance, current activity in the city centre has concentrated on budget hotels and specialist student housing.
There are now signs that things are on the move. The attractions of Edinburgh as a city to invest in after London and Aberdeen are compelling; they don’t build them like this any more.
Caltongate, the former bus depot in New Street, has been acquired from the administrators for the former developers by a South African-funded company which is pushing ahead with plans to redevelop the site with housing, offices and a hotel. A hard-fought planning consent is in place, which must be a major attraction.
The Quartermile development of the former Edinburgh Royal Infirmary, which was under financial water, is in the process of being acquired by a development company, making use of private equity finance believed to be from abroad, which in due course will continue with this mixed-use scheme.
The four-acre former railway goods yard site at Haymarket, previously sold by the council and which has been vacant for perhaps 50 years, is being marketed as a major office opportunity of 400,000 square feet with hotels, retail and parking. It is unlikely to be built without major office pre-lets, although the hotels and underground car park may proceed more rapidly.
The former Scottish & Newcastle site at Fountainbridge, acquired by the Bank of Scotland for its world headquarters, has been purchased by the council to enable Boroughmuir High School to be relocated on a part of the site.
The intention is for the city to seek partners to facilitate the development of the remainder of the site for mixed use including a substantial residential element. Just to the north of this Springside has been partially developed by Grosvenor/AMA.
The redevelopment of a major part of the south side of St Andrew Square is the most visible scheme, incorporating the former listed HQ of Scottish Provident Insurance. The site has been acquired by Bowmer & Kirkland, a Derbyshire contractor/developer, due to go on site in 2013 with a five-star hotel and retail units.
The interest in the acquisition of sites by companies in many instances funded from abroad supports the view that this unique city still has the ability to attract investment in first-class property.
After a dearth of development since 2007, the signs for the redevelopment of these black holes is looking considerably better but buildings do not appear overnight, so don’t hold your breath or expect cranes on the skyline next month.
Charles Guest FRICS is a consultant at Ryden
Best-laid plans . .
CONTROVERSIAL plans by Mountgrange Capital for a five-star hotel, 200 homes, 250,000 square feet of offices and shops, and a public square at Caltongate, just off the Royal Mile, fell through when the developer went into administration in 2009. But plans for the site were revived after a consortium led by Artisan Real Estate Investors announced in December that it wanted to press ahead with a mixed-use development including a hotel, housing and offices.
The four-acre former goods yard at Haymarket, meanwhile, has lain derelict for decades and construction efforts have struggled to get off the ground. Plans were thrown out in 2009 because of concerns over the impact of a proposed 17-storey hotel, and revised designs also had to be resubmitted after developer Tiger failed to pre-let space to occupiers.
A devastating fire in the Old Town in 2002 created a gap site that still lies empty. However, work is to get under way on a major Ibis hotel this year after councillors overruled officials and Historic Scotland and approved the scheme.