By Scott Wright

GLASGOW and Edinburgh have been hailed as two of the “most resilient” retail destinations in the UK, despite extended periods of lockdown and working from home continuing to limit footfall in both cities.

New research has found Edinburgh has the “most productive retail space” in the UK outside London based on sales density – a key retail metric which broadly measures revenue generated per square foot of space – with Glasgow immediately behind the Scottish capital. Some 39 cities were analysed.

The findings, in a report published by property firm Knight Frank today, may surprise observers of Scotland’s town and city centres, which have seen hundreds of shops, bars and restaurants close since the pandemic took hold in March 2020,

With office workers only just beginning to gradually return to workplaces following the Omicron outbreak, footfall continues to lag behind pre-pandemic levels. However, there are signs of recovery.

Figures released by Scottish Retail Consortium-Sensormatic IQ on February 4 found that shopper footfall was down by 16.2 per cent in January compared with the same month in 2020. But the January number was an improvement of 6.6 percentage points on the figure for December, leading the SRC to declare the findings offered retailers are “flicker of hope”.

The latest footfall data came shortly after the SRC has reported a decline in the shop vacancy rate to 16.1% in the fourth quarter from 16.4% in the preceding three months.

Knight Frank declares today that the retail offerings of Scotland’s two biggest cities have “proven resilient” in spite of huge changes in the way people shop in the last two years, which have seen the pandemic accelerate the rise of online retailing and hasten the closure of many bricks and mortar stores.

It found Edinburgh had a sales density of £665 per square foot, before the opening of the high-profile St James Quarter last year. Glasgow had a sales density of £611 per sq ft, compared with an average of £329 per sq ft across the 39 cities analysed.

The agent’s report suggests that Glasgow and Edinburgh performed well on criteria beyond sales density. Retail rents in Glasgow have rebased by just -1.9% in the last decade, while rents in Edinburgh have been rebased by -12.5% against a UK cities’ average of -35.2%.

Knight Frank found also that vacancy rates in both Edinburgh and Glasgow were below the UK cities’ average of 20.3%, at 13% and 18.7% respectively.

The report comes shortly after plans for a major shake-up of the retail scene in Glasgow were announced.

In January, Land Securities revealed proposals to demolish the Buchanan Galleries shopping destination and replace it with a “mixed-use urban neighbourhood”, comprising shops, homes, hotel accommodation and hospitality outlets.

The plans are tacit recognition that major city centres can no longer rely solely on the retail sector to drive their economies.

In Edinburgh, plans emerged earlier this month to transform the former Jenners department store on Princes Street into a hotel with retail elements.

Alasdair Steele, head of Scotland commercial at Knight Frank, said: “There has been a lot of talk about retail re-purposing, but the level of activity has thus far been fairly limited. It can be a complicated and costly process and often the numbers do not stack up from an investor’s perspective.

“The launch of the St James Quarter in Edinburgh will undoubtedly have an effect on other retail pitches in the city – with the data capturing that still to come through.

“However, as the plans at Jenners demonstrate, there are opportunities to convert retail space that may be surplus to requirements and some of this could be used to address Edinburgh’s perennial lack of new office space under development.”

David Lonsdale, director of the Scottish Retail Consortium, said: “Scotland is incredibly fortunate to have major flagship retail destinations in Glasgow and Edinburgh.

“The past two years have been tumultuous with both cities having been hit hard by Covid and government restrictions. In particular, they have suffered from the prolonged exodus of office workers, tourists and students.

“However, both cities continue to have tremendous strengths and a promising future as premium retail destinations.”

But he added: “That said, both cities cannot rest on their laurels. Both need to continue to work closely with retailers and the wider private sector to ensure they evolve and continue to provide compelling reasons for people to visit, spend time and money.”

Stephen Springham, head of retail research at Knight Frank, said: “The proposed plans for Edinburgh’s Jenners department store and Buchanan Galleries are two of the highest profile examples of retail space being re-purposed in city centres in the UK.

“Yet, perhaps ironically, they are two of the least over-supplied city centre markets.The devil in the detail is that, in Scotland, our research suggests it is out-of-town where retail space is most over-supplied, rather than in city centres, and this is where change of use is most likely to follow. The question is whether this out-of-town floorspace is viable for alternative use.

Asked if retail has a significant part to play in the Covid recovery, Mr Springham added: “Retail still has an important role in city centres, but there will inevitably be a period of adjustment following the acceleration of changes to people’s shopping habits during the pandemic.

“The return of people to their workplaces will help, as will the lifting of Covid-19 restrictions and the easing of people’s fears about the disease, but there is also some room for support from policy-makers in the form of continued rates relief and flexible planning where change of use is required.”