The shift in footfall that new developments bring offers commercial property lawyers change-of-use opportunities, writes Fraser Hardie
In RETROSPECT, the 1980s, 1990s and the first five years of the 21st century aggregated into a brilliant 25-year period for legal practitioners in commercial property in general and the retail sector in particular.
Shopping malls emerged in locations across Scotland; from Aberdeen to Ayr, there were projects that required the talents of the legal profession in respect of land titles, planning and construction.
But that came to an end somewhere around 2005-6, when property activity generally made a relatively quick shift from top gear to neutral. As a result, legal work associated with the industry has, since then, tended to be confined to investment sales and purchases of existing stock rather than laying the foundations for new development.
So where next for Scotland’s talented commercial property solicitors in an environment that has changed substantially, not always for the better, over the past ten years?
In the absence of more large-scale development, perhaps the next big focus could be on changes of classes of use, relating to retail buildings now empty or under-performing as a direct consequence of footfall shifts in city and town centres. For example, Buchanan Galleries (undergoing a £400 million extension) and St Enoch have added positively to the retail profile of Glasgow city centre but at the same time, the debilitating shift of footfall caused by their emergence (especially on Sauchiehall Street) is clear to see.
Nevertheless, what to do with traditional retail units made redundant should be looked upon as much as an opportunity as a problem. In Glasgow, this has already happened to some extent with older office buildings, whose floorplates are incompatible with modern fibre-optic technology, having been given a new lease of commercial life as flats, serviced apartments or hotels.
Edinburgh is some way behind Glasgow in the provision of contemporary retail mall-type floorspace but that will change with the transformation of the St James Centre into an £850 million, multi-faceted “quarter” with shopping at its core.
However where will this leave the rest of the city centre retail profile which, with the exception of Princes Mall, is of the traditional high street variety?
St James, if completed, will inevitably draw the retail core further east, leaving the possibility of large change of use requirements on parts of Princes Street and subsidiary streets – Frederick Street, Hanover Street, etc. Hopefully, St James or no St James, George Street will retain its unique character.
Until more is known about rents and other leasing conditions at St James, it is impossible to say how big the movement will be. It seems reasonable to presume the development will attract some retailers currently not represented in Edinburgh. Other big retailers may decide it is worthwhile having a presence in both St James and their current locations.
But it seems highly likely that a fully operational St James will increase the vacancy rate in some parts of the city centre, which – as in Glasgow – begs the question as to what can be done with properties that become empty.
The only way forward appears to be more flexibility in terms of the classes of use permitted for such buildings.
Last year, Edinburgh planners recommended refusal of an application to turn a retail unit (empty for some time) on Princes Street West into a bank and restaurant above on the basis that the location was “zoned for retail”. Sensibly, city councillors overturned this decision and the scheme is going ahead, bringing a redundant section of the street back to life.
Clearly, no-one would like to see a future in which Princes Street peters out towards its western extremity as a string of pizza parlours but with daytime footfall on this section much less dense than the east/central part of the thoroughfare, options beyond retail need to be considered.
The prospect, however, of an increased vacancy rate among city centre retail units should be seen as a glass half-full rather than half-empty. A functioning, fully-let St James will open up opportunities for new ideas as to the role of buildings made vacant as a result and their transformation to possible residential or leisure use – or simply continuation as a new form of retail.
Those involved claim a completed St James will result in Edinburgh leaping from 13th to seventh place in the list of best shopping destinations in Britain. This must be good news for current retailers and for our profession, given that all of this will not be achieved without legal back-up. Yes, for all the setbacks of the past few years, Edinburgh is still a good place to be a commercial property lawyer.
• Fraser Hardie is lead partner in the Edinburgh office of Blackadders, www.blackadders.co.uk