Retail supported by attractions and strong food & drink potentials resulted that the turnover in the area outperformed the rest of Scotland and dropped slightly (0.3%) compared to figures in 2012. 2.3.2 Market rents Local evidence shows that the Old Town and Grassmarket area fares much better however retail units for rent are on much smaller scale and demanded by individual specialist occupiers. On the other spectrum of the local retail structure the hugely popular food & drink premises (pubs, bars, cafés) pushed rental prices upward. Market evidence show that rental prices around Argyle House are ranging in £170 - £220 for second-hand B category and £260 - £439 for new, niche / specialist shop or food and drink units (Appendix 2) 2.3.3 Market Yields Knight Frank measured the retail market yields to be on an average 6.2% in the UK (2013b). Surveys conducted show that the main customer activities influencing retail development mixes were: “meet with friends” – 12%, “visitor attraction” 27%, “had a meal” 27% and shopping” 34%. The consequence is a shift in retail demand by marking the need for more affordable independent fashion design shops, non-chain pubs, cafes and restaurants. Demand for trading space seen retailers designing their stores to maximise trading on upper floors adopting an international trend of “Maisonretailing”. Neighbourhood and high street retail transforms as customers increasingly look for cost efficiency and to avoid car use and parking charges resulting changes in daily shopping patterns.
2.4 Hotel 2.4.1 Trends Hotel industry in the UK is doing well as distressed property prices, improved availability of funding resulted a huge 28% uplift in hotel transactions. There is a shortage in available hotel development sites given the strong competition for greenfield and brownfield development lands. Hotel operators are increasingly teaming up with large property growth funds in the form of Joint Ventures to manage risks while accessing potentially lucrative markets (PwC 2012b). Edinburgh remained one of the most popular destinations in the UK, witnessing rise in hotel income by 6.10% and increasing capital values by 4.80%. Gross operational profits were reported to be up by 11.1% and revenue figures up by 17.7% compared to a year back (JLS; Savills 2013b). 2.4.2 Hotel development scene in Edinburgh Hotel landscape is dominated by 3 and 4 star hotels (29% and 19%) respectively with another 24 current development in the pipeline. However only 8 are due for completion by the end of 2015, the rest