The long-awaited £1 billion redevelopment of the Edinburgh St James Centre will finally get under way with immediate effect after Dutch pension fund asset manager APG agreed a deal with TH Real Estate to take a 75% stake in the 1.7 million square feet retail and leisure centre.
The existing “Brutalist” St James Centre, which for decades has been an embarrassment and an eyesore for Scotland’s capital — a Unesco World Heritage city — will finally be demolished.
TH Real Estate will keep a 25% 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 and represents one of the largest inward investments for Scotland this year.
The Edinburgh St James project will include 850,000 square feet of retail space, anchored by John Lewis, a multi-screen cinema, a world class W Hotel, and 150 private apartments.
APG said the development, designed by Allan Murray Architects, will help move Edinburgh further up the UK retail rankings, from 13th to 8th.
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, has now been appointed main contractor.
The retail and leisure element of the project is expected to be completed in 2020, with the full scheme completed in 2021.
The construction phase will begin with the demolition of the existing St James Shopping centre.
The mall, constructed in the 1960s, has now closed its doors after more than 40 years of trading, although John Lewis, which will anchor the new Edinburgh St James, will continue to trade throughout construction.
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.”
Myles White, director of retail, TH Real Estate, said: “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.”
Scottish Government cabinet secretary for the economy 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 Council’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.”