Edinburgh continues to have the lowest retail vacancy rate of the UK’s major cities, excluding London, despite the introduction of St James Quarter.
The latest analysis from commercial property consultancy Knight Frank found that despite the new shopping district contributing to the expansion of the city centre’s total retail space by 424,000 sq ft year-on-year - an increase of 25% - the number of vacant units remained steady at 13%.
The average vacancy rate among the UK’s top 10 major conurbations in the nations and regions was 21% by the end of last year. Across the M8, Glasgow’s rate stands at 22%.
While Edinburgh’s sales productivity - a measure of non-food spend by consumers compared to an area’s retail space - inevitably dropped with the completion of St James Quarter and the post-Covid fluctuations in spending, it has still remained relatively resilient at £389 per sq ft, against the UK cities average of £357 per sq ft.
In 2021, the Scottish capital recorded sales productivity of £665 per sq ft, when spending was compacted into a more constrained retail footprint.
Knight Frank stated that Edinburgh had adapted well to the introduction of the new shopping centre, with different areas of the city carving out their own niches – even the traditional retail thoroughfares like George Street.
Princes Street, on the other hand, will take time to evolve away from its ‘big box’ retail history, perhaps towards a more leisure and hotel destination, which suits the larger buildings – many of which have historically unloved upper floors.
Euan Kelly, capital markets partner at Knight Frank Edinburgh, said: “Edinburgh has always been a mixed-use city centre, supported by strong footfall, but the introduction of St James Quarter has meant different areas have re-established themselves or begun to carve out their own distinct identities.
“George Street, for example, is still performing very strongly and remains the focal point for aspirational and luxury brands in the city.
“At the start of 2022, the street had a number of ‘To Let’ boards, but the vast majority were snapped up in relatively quick order by occupiers, and the result is that rents have been moving up from a low post-covid base.
“Retail more generally has gone through a challenging period, marked by structural changes, but through that process it is beginning to emerge in better shape, with operators trading well, rents re-basing to a lower, more sustainable level, and business rates reducing as well.“
He added: “In turn, we’re seeing more investor interest in the right type of retail property – last year we had a significant number of enquiries for three assets on George Street, particularly from private wealth given the attractive lot size, tenant profile and obviously location.”
Knight Frank’s head of retail research Stephen Springham continued: “Ostensibly, Edinburgh is going against the grain of other UK cities, in that it has seen new large-scale retail development.
“But St James Quarter addresses and reverses one of the key structural failings of retail markets generally – a lack of investment.
“In the short-term, there will inevitably be a period of disruption as the new scheme beds in, retailers and consumers alike assess the impact, and the city adapts to slight shifts in gravity.
“But in the longer term, the holistic benefits to the city will become increasingly apparent.”
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