Hotel developers are currently eyeing opportunities in a range of Edinburgh neighborhoods.
LaSalle Investment Management, acting on behalf of a pension fund client, has announced plans for a major redevelopment of the BHS store on Princes Street, one of the major thoroughfares in the city. In addition to a new hotel, the development would include a destination rooftop restaurant and bar as well as improved shopping facilities. When completed, the project is expected to have a value of circa €60 million. CDA Architects has been appointed to the refurbishment project.
The property is made up of two buildings connected by a bridge and basement. Together, the buildings provide 122,000 square feet of floor space, although most of the upper floors have been empty or used as storage for years. These upper floors are expected to become a hotel.
The developers are reportedly hoping that a planning application could be lodged early in 2017 with completion of the plan in 2019.
“We have already received interest from major fashion retailers for the redeveloped Princes Street store and from high quality hoteliers for the upper parts of the development, so these proposals could move forward quickly,” Steve Spray, fund manager at LaSalle Investment Management, said. “The rooftop restaurant opportunity has also attracted interest from some leading international restaurateurs and would create a venue with one of the best views in the world.”
Developments and Deals
The announcement comes after several notable hotel developments for Edinburgh, and following a year of strong occupancy and ADR rates. In 2015, hotels in Edinburgh saw occupancy rates reaching 81.5 percent and average room rates “significantly higher than the UK average.” In the wake of the Brexit and the weakened pound, insiders have suggested that domestic tourism in the UK may improve, making hotels in Scotland a solid investment.
Earlier this week, Starwood announced plans to build Scotland’s first W Hotel in Edinburgh. Opening in 2021, the 214-room hotel will be the centerpiece of TH Real Estate’s 1.7-million-square-foot Edinburgh St James development, which is slated for completion in 2020.
In May, a new hotel was announced for the BT Murrayfield Stadium in Edinburgh. JLL’s hotels and hospitality group announced plans to source offers of interest in the site from potential investors and operators, with the ultimate goal of building a 100- to 200-room midscale or upper-midscale property. “Edinburgh’s hotel market is flourishing and this is a unique opportunity to develop a hotel in a prominent location,” Keith McBain, director at JLL, said. “BT Murrayfield is the home of Scottish Rugby and very well located. We expect a high level of interest from investors and operators in developing the site.”
March saw the Edinburgh City Centre Haymarket Hotel, currently owned by a joint venture between a syndicate of private investors and Whitbread and operated by Premier Inn, go up for sale. JLL’s Hotels & Hospitality team is handling the deal.
And at the beginning of the year, Edinburgh's Crowne Plaza Hotel was sold by AlixPartners to "an unnamed high net worth investor" for an undisclosed sum. “We received interest from in excess of 150 parties in the Crowne Plaza from a variety of buyers that were eager to purchase a hotel asset in one of the strongest performing hotel market in Europe,” Kerr Young, director of JLL Hotels and Hospitality Group, said at the time. “The price achieved for the hotel reflects a benchmark yield for a regional hotel asset to be sold as a going concern.” The sale was subject to a franchise agreement with IHG.