ITS glory days as one of Europe’s finest shopping streets may have passed, but Princes Street is still a magic name for retailers and hoteliers, judging by the response to the news that the BHS store on the thoroughfare is up for redevelopment.

The collapse of BHS is set to spark a major change to Princes Street in Edinburgh with a £50 million development already being proposed for the firm’s flagship store, which is located between, and across from, the Sir Walter Scott Monument and the Royal Scottish Academy and National Gallery on The Mound.

Developers have confirmed that hotel companies and retailers are already expressing interest in the building which is to be refurbished once the store closes.

Built for BHS in the 1960s, and only ever occupied by the company, the store is now leased to BHS by the British Coal Pension Fund which owns the prime site at No 64 Princes Street.

Some 800 staff across Scotland will lose their jobs when the stores eventually close, probably next month. They are currently being wound down by administrators Duff and Phelps who are awaiting a date for liquidation of the business.

The plans for the Princes Street store have been advanced by La Salle Investment Management, the specialist real estate investors, on behalf of the British Coal Pension Fund.

The BHS administration team did seek a buyer for the lease of the store, but the timing in advance of the Brexit vote is understood to be one reason why no purchaser could be found – commercial property prospects have been badly hit before and after the EU referendum vote.

La Salle are now proposing that the store, which backs on to Rose Street, be subdivided into a 50,000sq ft retail unit containing two shops over the existing basement, ground, and first floors.

The ambitious plan would also see a 140-bedroom hotel and restaurant created on the upper floors.

The rooftop restaurant in particular would have magnificent views across to the Old Town and Edinburgh Castle and the developers consider that it would become a tourist attraction.

The Rose Street extension building at the store – long considered an eyesore by local people – would be demolished and rebuilt one storey higher, but the frontage on to Princes Street would largely have to be retained as the store is a Category B Listed building.

Edinburgh firm CDA architects have been appointed for the project and it is understood that a notice of a forthcoming planning application has already been sent to Edinburgh Council.

It is unlikely planning permission would be sought later this year or early next year and will be carefully considered by the council as the store is included in the World Heritage Site over which Unesco has voiced concerns about recent developments.

If planning permission is granted, completion of the extensive project would be expected by 2019.

Steve Spray, fund manager at LaSalle Investment Management, said: “We have received proposals from major fashion retailers for the redeveloped Princes Street store and offers from high-quality hoteliers for the upper parts of the development, which have been mostly redundant for decades.

“This is a fantastic location and it can be a really good flagship retail store. The rooftop restaurant opportunity has already attracted interest from some of the world’s leading restaurateurs and would give spectacular and unrivalled views of the Old Town. I could see it becoming a tourist attraction in its own right.”