RENT for prime retail space on Princes Street has soared by almost a third as businesses previously housed in the St James Centre look for new homes, a report has said.
It also showed Scotland has seen the largest rental growth in the UK at 4.5 per cent, with the boost being put down to prime properties in both the Capital and Glasgow.
Ross Wilkie, retail director with Colliers International, which published the report, said the closure of the St James Centre for a £1 billion revamp had caused a knock-on effect.
He said: “St James is going to be a world-class shopping centre which, as a destination, is something that Edinburgh has been lacking.
“Rents on Princes Street premises, in particular, have soared as displaced tenants from the old St James battled to secure alternative accommodation.
“While we may see a reversal when the new St James opens, in the longer term, this will help cement Edinburgh’s credentials as a world city and will be positive for all areas, especially the east of Princes Street, which is closest to the new centre.”
Retail space on Princes Street is thought to fetch up to £200,000 a year for even a small, single-storey unit.
A number of businesses have already moved over from the St James Centre following its closure last October, including jewellers Chisholm Hunter and sports retailer Sports Direct.
Roddy Smith, chief executive of city centre group Essential Edinburgh, said competition for space in the city centre showed it was an attractive option for businesses.
He said: “This has undoubtedly been increased because of the work at St James, and the displacement of retailers and others while the work is carried out, and we will need to see how this aspect settles down.
“However, there is no doubt the completion of Edinburgh St James will add to the retail and hospitality offerings in the city centre, help drive footfall, and make the city centre an even more attractive location.”
According to the Colliers report, Zone A rents for retail space on Princes Street stand at £240 per square foot, an increase of 30 per cent over the last two years.
Liz McAreavey, chief executive of Edinburgh Chamber of Commerce, said: “Rents are demand-driven, so it is clear that there is a high demand for space on Princes Street which is obviously a good indicator that businesses see Edinburgh city centre as a positive location.
“That demand has been more intense in the short-term because of the businesses which have been displaced while the Edinburgh St James development work is carried out. We will have to wait and see how demand settles once Edinburgh St James comes on-stream. Longer term, it is positive that the city centre is such an in-demand location and Edinburgh St James is expected to add to the attraction.
“However, rents are a major cost for businesses, and while they will always reflect demand it is important that they do not reach levels which become an obstacle to occupancy.”