The collapse of a “critical” land deal has cast further doubt on the future of the £850 million redevelopment of the St James Centre.
Henderson Global Investors wants to transform one of Edinburgh’s biggest eyesores into the thriving new “St James Quarter”, featuring flagship shops, an upmarket hotel, apartments, offices, cafes, restaurants, new streets and a public square.
But Thistle Hotels, operator of the King James Hotel in the heart of the east end site, is understood to have a clause in its lease, signed with the previous operator of the St James Centre, that guarantees its existing location.
Developers hoped to get round the clause by building a new hotel for Thistle on the site of the Picardy Place roundabout, following a traffic shake-up proposed to accommodate tram lines. But sources at the city council today revealed that a deal once lined up for the site with HGI was never signed. And the council’s own plans for the roads shake-up that would have created the hotel’s new home have been shelved because of the decision to take the tram line only as far as York Place.
Councillor Jason Rust, Tory economic development spokesman, said: “It is concerning if things have fallen apart. We are looking for reassurances now from Henderson.”
Council chiefs indicated two years ago that they had agreed to sell the space at the Picardy Place roundabout to HGI for “market value” when the company was ready to press ahead with its development.
Developers confirmed that the agreement was “critical” for the wider St James proposal.
A spokesman for Henderson Global Investors said: “We have yet to fully analyse the implications of the delays to tram construction programme and the reduced extent of the proposed service. However, HGI believe that [the tram line’s] continuation to Leith and Edinburgh Waterfront is expected in the future.
“The St James Quarter masterplan envisages the reconfiguration of Picardy Place to be critical for this future provision. The site created as a result of this reconfiguration remains a potential opportunity for the relocation of the King James Thistle Hotel.”
Graham Birse, managing director of Edinburgh Chamber of Commerce said: “The important thing is that the council now engages with Henderson Global with a view to making a time commitment to the next stage of the project.”
A spokeswoman for Thistle Hotels said: “Until we hear anything further, it is business as usual at The King James by Thistle.”
Councillor Tom Buchanan, city economic development leader, said: “Discussions about building a hotel on Picardy Place have been held with HGI, but have not been finalised.”