Pub giant pins hopes for Capital expansion on slump in property

Published on Monday 8 September 2008 10:14

THE boss of pub giant JD Wetherspoon said the credit crunch may help it achieve its plans to expand in the Capital.

Chief executive John Hutson said the group wants to open two more pubs in the city centre and at least two in Edinburgh's suburbs.

He said that one of the main stumbling blocks to its expansion in the Capital, where it has two city-centre branches and one in Leith, has been that properties have been "overpriced" in recent years.

But now, with the economic slump hitting property values, he is hopeful that the firm will be able to secure sites in the city and expand on its current portfolio, which consists of the Standing Order on George Street, Lloyd's at the Omni Centre and Foot of the Walk in Leith.

Mr Hutson said: "We have six (bars) in the middle of Glasgow and a further four or five in its suburbs, yet only two in central Edinburgh and one in Leith. Edinburgh does not have as large a population as Glasgow, but we could easily open another couple of sites in the centre.

"It is proving a difficult part of town to acquire new sites. Historically, there is a slightly different approach to planning, where you can't get a conversion to pub use if residents are living above, which happens in quite a lot of cases in Edinburgh.

"Also, because it is quite a compact city centre, competition is very strong and that pushes up property values. We've never wanted to overpay, and bargains like the Standing Order on George Street are tough to find.

"But one of the outcomes of the current economic climate is that property prices are becoming more affordable. Commercial prices are starting to fall and there are fewer companies competing for them, so that generally throws up opportunities that we could take advantage of."

JD Wetherspoon has had a difficult time finding new premises to lease or buy in the city. Last year it was planning to open a new pub on South Bridge in the building that was formerly a Flip clothes store, but another buyer outbid it.

It has had better luck in other parts of the Lothians and is planning a 1.4 million refurbishment of the former Hayweights Bingo Hall in Musselburgh.

Mr Hutson said its existing Edinburgh portfolio is now adapting well to the smoking ban, although sales at Foot of the Walk have been impacted by poor outside facilities for smokers and tram construction.

Alan Creevy, national director for retail, leisure and hotels at property firm Jones Lang LaSalle, said Wetherspoon will find it difficult to find a discounted price in the city centre. He said: "Rentals are continuing to grow in the city centre and, for the size it would want, it may be a little cooler but there will still be strong demand.

"I don't see there being too many bargains in the city centre. Big properties tend to be owned by big institutions, so they are unlikely to sell, and rents are still rising."