Hotel group checks out of Cowgate fire site scheme

A FLAGSHIP city centre hotel and leisure scheme has been hit by fresh delays after a hotel operator walked out on a deal.

Work had been due to start several months ago on the redevelopment of the site of the massive 2002 Cowgate fire – dubbed SoCo by developers.

It was today confirmed an operator that had been lined up to run the 200-bedroom hotel has opted against moving on to the site.

The massive scheme, which would have also included shops, a business centre and glass walkways, is now on hold until a new operator is secured. Despite the blow, developers say they remain confident about being able to press ahead with the scheme in "the near future".

It is understood nothing will be able to happen on the gap site until a pre-let is secured.

A property source said: "They had an issue with the original hotel operator and when that deal disappeared the whole thing slowed down dramatically.

"My understanding is that they will not get moving until they get a hotel developer in."

The scheme was also to see the La Belle Angele nightclub reinstated in the basement of the new complex, while a new 6,000sq ft festival venue would also have been created over two floors, although an operator has not yet been found.

John Shepherd, chief executive of SoCo developer Whiteburn, said: "The development timetable has been delayed after the group, which was the previously agreed hotelier for the SoCo site, bought out of the contract.

"We are currently engaged in discussions with other interested parties and we are confident of moving forward with the development in the near future."

It is the latest in a string of major Edinburgh developments to be hit by delays. Other gap sites include the site of the former Fountain Brewery social club and Caltongate, which are both vacant after developers of both fell into administration last year.

Property experts admit it is difficult to secure the necessary pre-lets that can get sites moving in the current market.

Stewart Taylor, an Edinburgh-based director of real estate firm CB Richard Ellis, said:

"On every occasion, these guys look at sites on their own merits but they will on the whole want to be within walking distance of the city centre and they will be cautious about what they are next to."