Straws in the wind for developers

the highest in Europe according to Healey & Baker's latest world survey.

Meantime, rents in Edinburgh's Princes Street and Glasgow's Argyle

Street have been rising. Another straw in the wind -- last week the

changed fortunes of the retail property market in the southern half of

Britain persuaded one developer to board up a partially completed retail

scheme temporarily.

''Here activity remains strong,'' says John Studholme of Hillier

Parker. ''The economy has grown steadily without the unsettling economic

fluctuations of the south of England.''

The sharp reduction in consumer spending there, largely due to the

high level of mortgage interest on loans on highly priced houses, has

coincided with the first revaluation in England since 1973. Retailers

there are cautious, but less so in Scotland and northern England where

ultimately businesses should benefit from the changes in rating

overheads.

''In Scotland,'' says Mr Studholme, ''although there may be a slowing

down in the early nineties, this is seen as a time for developers to

commence medium term projects which often take three to five years from

conception to reality.''

Retail developments under way or in the pipeline in Scotland are

''needs'' led -- long-awaited town centre developments or renewals of

precincts of the sixties and seventies that no longer satisfied

retailers or shoppers. Farther south at the height of the retail boom

the sheer momentum induced less discriminating investment.

A good proportion of retail space likely to come onstream in Scotland

in the short to medium terms is pre-let. The first major completions due

in April will be Bredero's #60m Bon Accord Centre in Aberdeen, now 90%

let, and Eagle Star's Howgate scheme in Falkirk, more than

three-quarters let. Later in the year Sheraton Caltrust's St Giles'

Centre in Elgin and Scottish Metropolitan's Loreburn Centre in Dumfries

should start trading.

The Loreburn and Howgate centres exemplify a new requirement in town

centres, the need to respect the existing streetscape. The frontage of

the Loreburn Centre on the pedestrianised High Street in Dumfries

implied that it was fashioned at different times by a number of

different individuals. Yet internally it is a modern two-storey,

enclosed centre with shops and large stores, lifts and escalators and

public

areas ranged around two glazed ''squares'' linked by a glazed mall

that offers underground parking.

In Falkirk the Howgate Centre will form an appropriate stop at one end

of the newly refurbished High Street, and later Guinea Properties'

Callendar Square will round off the prime retail sector with a similarly

harmonious new building at the other end of the pedestrianised area.

This year work will be under way on the refurbishment of CIN's St

James' Centre in Edinburgh and on their Piazza Centre in Paisley. Ossory

Estates have started a major refurbishment of Greenock Town Centre.

Morrison Developments are due to start in April on a town centre

development in Galashiels, and before the end of the year the

long-awaited Buchanan Centre beside Glasgow's new concert hall, the

largest town centre retail project in Scotland, should be on the way.

Paisley Developments -- a consortium of Bredero and Arrowcroft --

started work on the new Paisley Centre last summer. Site assembly began

as long ago as 1978. It should be ready for trading early in 1992, an

indication of the patient persistence needed by developers and agents.

Following on, Cala Properties hope to fit the last piece in the Paisley

shopping jigsaw. Also still charging ahead on site acquisition are

Mountleigh who hope to supplement the St Nicholas and Bon Accord centres

in Aberdeen.

The early nineties will see the Maybury Centry in West Edinburgh

start, but reduced to 300,000sq.ft. Mr Studholme believes a 50% larger

scheme would not have had a detrimental effect since two-thirds of the

space is being taken by two traders, Marks & Spencer and Asda. He notes

there are other schemes in the pipeline for Wishaw (Guinea Properties),

Kilmarnock (Balfour Beatty), for an extension to the Thistle Centre at

Stirling, and for new developments in Dundee, Berwick, and Perth.

He is optimistic about the future. While the next 12 to 18 months may

prove difficult for retailing, such downturns, he argues, tend to be

cyclical and many new developments will not be onstream till 1992 and

beyond.

In their recent report, Weatherall Green & Smith, too, are encouraging

about development in Britain as a whole, believing ''there is a firm

basis for future capital growth which currently may be underestimated.

Attention has focused towards the next election, and perhaps a

vote-winning fall in interest rates in the next 12 months, and a

resurgency in consumer expenditure. Even in the present slow market,''

they add ''we are seeing forward-thinking retailers willing to position

themselves in prime areas, including locations with high rental growth,

to take advantage of the longer term potential.''

Looking to the future Mr Studholme hopes for more co-operation between

suppliers and tenants of retail space, such as exists across the

Atlantic. Here the 25-year lease created by funding institutions still

dominates but he says: ''I feel there are more advantages than

disadvantages in shorter leases of 10 to 15 years that give greater

flexibility to both occupier and owner.

''Even some of our 1980s schemes may need partial refurbishment during

the 1990s but this could be hampered by the rigid lease structures. Some

retailers request long leases yet in relatively buoyant periods they

refit their own premises within five years.

''In the nineties retailers, urged by shoppers, will be more demanding

for the right shop unit in modern premises where they can function

effectively and profitably. So the market should be increasingly aware

of the need for adaptability and the need to be geared up for the

cyclical nature of the economy.''