The store in Princes Street is set to be transformed into two new shops, a hotel and a rooftop restaurant.
The current shop is scheduled for closure after the company went into administration earlier this year.
But the owners of the building at 64 Princes Street and the linked site in Rose Street have moved quickly to come up with alternative plans for the property.
The £50 million scheme would see a new flagship store taking over the basement, ground and first floors of the main store where BHS currently trades.
The Rose Street building would be demolished and rebuilt one storey higher, with two ground-floor retail or restaurant units and a hotel entrance all fronting on to Rose Street.
And the upper floors of both buildings would become a 140-bedroom hotel.
The proposals also feature a rooftop restaurant and bar on the Princes Street building with stunning views of the Old Town skyline from Arthur’s Seat to the Castle.
There are currently 50 staff employed at BHS, but the store is expected to close soon.
The developers say they expect the new retail, hotel and restaurants plans to create 250-300 new jobs.
They have already lodged a pre-application notification with the city council and hope to submit a planning application early next year.
But it is expected to be 2019 before the project is completed.
Steve Spray, fund manager at LaSalle Investment Management, which is spearheading the project on behalf of site owners the British Coal Pension Fund, said: “We have received proposals from major fashion retailers for the redeveloped Princes Street store and offers from high-quality hoteliers for the upper parts of the development, which have been mostly redundant for decades.
“This is a fantastic location and it can be a really good flagship retail store and improve the retail offering in this part of Princes Street.
“The rooftop restaurant opportunity has already attracted interest from some of the world’s leading restaurateurs and would give spectacular and unrivalled views of the Old Town. I could see it becoming a tourist attraction in its own right.”
The existing store was purpose-built for BHS in the 1960s and was Category B listed by Historic Scotland in 2008 because it was one of the first “panel buildings” in the street – so-called because of a panel of city planners who were pursuing plans to create a continuous first-floor walkway along the length of Princes Street.
The only surviving signs of the ambitious project are a few buildings with balconies intended to become part of the walkway.
The listing means little alteration can be made to the frontage of the building.
The two current buildings amount to a total of 122,000sq ft of floorspace, but only around 50,000sq ft is used for trading.
The upper floors were used for storage but modern retail practices means stores no longer keep as much stock on site and so much of the space has been empty.
The developers expect the main retail space to become a new flagship store of up to 50,000sq ft but say it would be possible to divide it into two stores instead.
They believe the two ground-floor Rose Street units may be most likely to become restaurants in line with interest shown by food retailers in the nearby Standard Life development in St Andrew Square and the St James Quarter.
As part of the hotel development, a light-well would be created down through the upper floors of the Princes Street building to brighten the inner rooms. The architects working on the project are Edinburgh-based CDA, and if the proposed development gets the go-ahead, it will be carried out by the team involved in Edinburgh’s Harvey Nichols store and next-door Multrees Walk.
BHS went into administration in April and in June it was announced the company would be wound down after failed attempts to find a buyer.
The administrators have been trying to sell the leases to some of the stores, but they have confirmed there is no buyer for the Edinburgh store. There is currently a closing down sale.
Deputy council leader Frank Ross said it was unfortunate that it was the demise of a long-established chain which had prompted the redevelopment plans, but welcomed the investment which the proposals represented.
And he predicted a lot of interest in both the hotel and the store.
He said: “Even in the light of the increase in hotel rooms coming on stream in the last four or five years, there is a growing need for more hotel accommodation.
That ties in with the double-digit increase in overseas visitors coming through the airport and goes to show that as an international destination we are very much in demand.
“And there are a significant number of world-renowned retail brands wanting to come to Edinburgh but who cannot find the right location. I think what we have here is the right location and the right store.
“I would not be surprised if there is very strong demand for the retail space.”