The landmark redevelopment of the Edinburgh St James centre will commence with immediate effect, now that Dutch pension asset manager, APG has agreed a deal with TH Real Estate, to take a 75 per cent stake in the 1.7 million sq ft retail and leisure centre. TH Real Estate will hold the remaining 25 per cent stake, on behalf of its UK Shopping Centre Fund. TH Real Estate will continue its role as development and asset manager of the project, for which construction will now commence. It will be one of the UK’s largest private sector regeneration projects.
The joint venture will commit to develop Edinburgh St James, which is anticipated to create an investment valued in excess of £1 bn. It represents one of the largest inward investments for Scotland this year.
A world-class example of city-enhancing place making, Edinburgh St James will comprise 850,000 sq ft of retail space, anchored by John Lewis, a multi-screen cinema and a world class W Hotel, which represents their debut in Scotland, comprising 214 rooms. In addition, 150 private apartments, offering breath-taking views over the City, set a gold standard for prime residential accommodation. Designed by Allan Murray Architects, the development will help move Edinburgh further up the UK retail rankings, from 13th to 8th and will support the city’s tourist industry which contributes an estimated £260m to Edinburgh’s economy each year. Edinburgh St James will also create up to 3,000 permanent jobs.
Laing O’Rourke, which had been appointed on a consultancy basis to advise on pre-construction works over the last year, has now been appointed as the main contractor for the project, for which the retail and leisure element is anticipated to complete in 2020, followed by full scheme completion in 2021. Confirmation of the joint investment partnership has paved the way for the commencement of the construction phase, which will begin with the demolition of the existing St James Shopping centre. The mall, which was constructed in the 1960s, has now closed its doors for the final time after over 40 years of trading, although John Lewis, which will anchor the Edinburgh St James scheme, will continue to trade throughout the construction process. Work will begin onsite on Monday 17 October, with demolition anticipated to take around 18 months to complete.
Myles White, Director of Retail, TH Real Estate, commented: “We are delighted to be strengthening our existing relationship with APG, with whom we have built up a strong and successful relationship over the past eight years, to partner on this exceptional development. Both APG, and ourselves, on behalf of our UK Shopping Centre Fund investors, look forward to a long term partnership on this investment which we believe will set a new benchmark for the future of retail and leisure schemes, both in the UK, and beyond.”
Robert-Jan Foortse, Head of European Property Investments at APG , said: “The Edinburgh St James project is one the UK’s largest and most significant regeneration projects. We are excited to become part of this scheme that will transform and reinforce the heart of Edinburgh city centre with the creation of a new shopping destination. Furthermore we believe that the addition of the W hotel will help attract even more tourists to this Unesco World Heritage city.
“As such, the project fits very well in our portfolio with stakes in shopping centres like Westfield Stratford City in London and CAP3000 in Nice. Edinburgh St James also fits in seamlessly with our strategy to increase our focus on ‘develop to core’ projects. In TH Real Estate we have a long time trusted partner and we look forward to working with them in the completion of the project and its management, once it has been completed.”
Cabinet Secretary for Economy, Jobs and Fair Work Keith Brown said: “The Scottish Government warmly welcomes this major investment in Edinburgh and Scotland, which will have significant positive impact on construction activity, jobs, and the economy. I am particularly pleased that the Scottish Government has been able to help unlock the investment by working in partnership with the Scottish Futures Trust and Edinburgh City Council on the Growth Accelerator Model through which we will be contributing significant sums and assisting the Council to manage risk. I also welcome the plans for a training academy to help ensure the positive impact of the investment on jobs and training is spread as widely as possible.
“This is a major signal of investor confidence in Scotland, and provides further demonstration that Scotland is open for business.”
Edinburgh St James has gained strong and widespread support, including from the Scottish Government and the City of Edinburgh Council, who have both encouraged the development’s progress. The two organisations have also provided local infrastructure funding to help regenerate the area surrounding the development site, further enhancing this key part of the city centre.
Edinburgh’s Economy Convener, Councillor Gavin Barrie, said: “This is an exciting step in the Edinburgh St James development and unlocks a major investment into the Scottish capital.
“The new St James will transform the east end of Edinburgh’s Princes Street, providing much needed premium retail space and leisure facilities, new homes and a world class 5 star hotel in the heart of the city – creating thousands of jobs in the process and adding millions to the Scottish economy each year.
“I am delighted the Council has played its part getting this development off the ground and supporting TH Real Estate reach this important milestone.”
Savills acted on behalf of APG. Cushman & Wakefield acted on behalf of TH Real Estate.
