EDINBURGH’S long-awaited tram line is fuelling a surge of investment in Princes Street with at least six major property deals worth around £100 million rubber-stamped this year.
Huge swathes of equity has been changing hands as investors look to capitalise on the economic rebirth of the famous thoroughfare after years of disruptive engineering works.
One of the biggest deals – the proposed £45m sale of Princes Mall – has not yet been completed but would see the prime site shopping centre, owned by the property company belonging to former Rangers owner Sir David Murray, sold to a US private equity fund and UK fund manager.
Leading real estate investment LaSalle Investment Management bought 121-123 Princes Street – encompassing New Look and Premier Inn – for £34m from Irish developer Deramore Property Group.
The prevailing interest in the brick and mortar assets of Princes Street comes just days after Apple confirmed it will share premises with the new Barclays Bank and in the same month Edinburgh was hailed an international property hotspot competing with the likes of New York, Boston, Sydney and Dubai for global investment.
Today, the News can reveal the long-awaited development of St James Centre may have taken a step forward after the fund that owns it clinched £100m of new funding from the Royal Bank of Scotland.
And the city is driving forward a new vision of Princes Street – described as the “beating heart of Edinburgh’s retail offer” – with a masterplan to shake off its planning shackles, allowing bars and restaurants to launch on a stretch previously restricted to commerce.
In April, as tram-related roadworks began to subside, shoppers flooded back into the centre with nearly three million people visiting in just that month – a 6.8 per cent hike on 2012’s figures.
The city’s ambitious bid to exploit the picturesque one-sided shopping precinct by pedestrianising half the thoroughfare and creating a one-way loop to George Street, has been shelved amid traders’ complaints.
But it is clear that with few, if any, empty shop fronts this winter, the green shoots of recovery for Princes Street are beginning to appear.
Gordon Henderson, of Edinburgh’s Federation of Small Businesses, said there had been several “big deals” taking place on Princes Street that would see a trickle-down effect for smaller retailers and the city as a whole.
“It’s obviously very good news for the city,” he said.
“The big investors are looking forward post-tram rather than looking backwards and investing in the city centre of the ‘Athens of the North’. There’s some really big deals involving big business and I’m confident that there will be a knock-on effect for William Street, Rose Street, the West End and more.
“These great investments and big stores on Princes Street will attract crowds to the city centre but those people then have to have somewhere to go after they’ve been in the shops.
“They will come in for the main destination shopping trip but will then want to have a coffee, lunch and visit the small independents that make Edinburgh unique.”
He added: “Many of these big stores are fantastic to have in Edinburgh but can be found in a lot of major city centres. Small independents add the real flavour to the shopping offer in Edinburgh.
“Princes Street provides the big internationally known brands and the smaller independent retailers will benefit from the crowds that are attracted to Edinburgh.”
It is calculated that Princes Street receives around 365,000 visitors per week, attracting an estimated £2 billion spend in its shops each year.
David Birrell, chief executive of Edinburgh Chamber of Commerce, said the tram line and inward investment would help create a “fresh feel to the street”.
He said: “Princes Street is the beating heart of Edinburgh’s retail offer and has a great heritage in attracting fantastic stores. The new tram line will hark back to that heritage and attract shoppers with a smarter, more accessible feel.
“And the investment in improved transport links has already helped to attract new retailers and a fresh feel to the street. It is absolutely essential for a city such as Edinburgh, which attracts millions of visitors each year, to complement its visitor offer with a world-class retail offer.
“There is more progress to be made, but our members are excited by the prospect of a thriving West End, a fully functioning transport system and Princes Street returning to its former glory as Edinburgh’s most popular thoroughfare.”
Andy Neal, chief executive of Essential Edinburgh – the city centre management company – revealed footfall has achieved double-digit growth since the tram works were removed last month.
“This is the result of the continued attraction of Edinburgh to tourists as well as the locals starting to find their way back,” he said.
“Despite the economic recession Princes Street has only ever had one or two vacant shopfronts and there does seem to have been more interest in those over recent months. All in all, things are really looking up for one of our iconic streets.”
Councillor Frank Ross, the city’s economy convener, said: “Princes Street is a key component of Edinburgh’s retail offering and its iconic setting provides a shopping experience for both residents and visitors that is second to none.
“Major brands continue to be attracted to Edinburgh and with a number of a new additions to Princes Street, our retail offering is going from strength to strength.
“However, it is crucial that we maintain this impetus in Edinburgh’s economy and as a council we will continue to work with our partners to ensure the Capital continues to flourish as a place to do business.”
Famous road still the city’s beating heart
by David Hatcher
Turn the clock back a year – the retail market was a car crash, with new names going bust every week, the property market was still wading through treacle because of a lack of bank finance and Scotland’s best-known street was sheer chaos because of the tram works.
What’s more, would the recovery in the property market in London ever spread north of the Border?
The picture now is completely different.
Buyers have finally realised that London is overpriced and there is value to be found in the UK’s strong regional cities such as Edinburgh.
As a result, some of the shabbier stores on Princes Street have now started to fill up and there is some sense of revitalisation.
Sure, George Street is the cool little brother with its Jack Wills and Cath Kidston, but Princes Street will always be the beating heart of the city’s retail pitch.
Glasgow might have more razzmatazz than Edinburgh as far as shopping goes, but for property investors, particularly those from overseas, Edinburgh always has a symbolic grandeur that draws them in and there is still a sense of reliability in making an investment in the city.
That is particularly the case on its main shopping street, but investors were never going to be piling in when they couldn’t even walk from one side of the road to another.
The Scottish property market, and retail landlords in particular, have had some dark days over the past few years, but with the new wave of interest back in the market, they are back making hay while the sun shines.
• David Hatcher is finance editor at Property Week
Boon for outskirts too
THE tram effect appears to be attracting major interest in Princes Street, but it is not just a city-centre boon.
Last week, the News told how a major supplier to the computer giant Apple – which also recently confirmed its entry into Edinburgh’s retail market – had opened a new test centre near the tram line.
Stuttgart-based Dialog Semiconductor signed a ten-year lease to open its second Edinburgh office in the Sighthill Industrial Estate.
Its location, a five-minute walk from the Bankhead tram stop, was said to be a crucial factor in sealing the deal for the premises and the route will prove to be a magnet for new businesses.