The owners of the St Giles Centre have blamed the rise of Edgar Road retail parks in Elgin for its closure.
Tenants have been given until close of business of January 20 to move out of the High Street mall.
A cash crisis that led to a massive unpaid business rates debt totalling between £600,000 and £750,000 has pushed the shopping centre to pull down the shutters.
Today the owners say the demise has been accelerated by support for the Edgar Road retail parks, which offer free parking for shoppers.
‘St Giles Centre was strong before retail parks’
The company operating the St Giles Centre, St Giles Shopping Centre Holdings Ltd, says it has faced “severe financial challenges” in recent years.
Statistics compiled by the Press and Journal puts the current occupancy of the mall at just 50%.
The firm says its cash woes have been caused by its reducing rental income alongside an increase in costs.
However, it says its financial struggles stretch back to a decision from Moray Council more than 10 years ago to allow all items except food to be sold at the Springfield Retail Park on Edgar Road.
It was a decision fought by the St Giles Centre and Robertson, which owns the Elgin Retail Park on the same street, at the time.
A spokeswoman for St Giles Shopping Centre Holdings wrote: “When the company acquired the centre, it had a strong rental income from a wide range of tenants, but this has deteriorated significantly due to Class 1 retail being introduced at the Elgin retail parks and the general demise of the retail industry.
“In 2012 the company incurred significant legal fees taking Moray Council to the High Court to try to stop them agreeing to sub-divide the bulky goods units at the business parks into smaller units, and giving them Class 1 retail consent.
“The company failed in this court action, and this resulted in the loss of many of the centre tenants.”
The spokeswoman confirmed Moray Council had seized rental income from tenants as part of its legal action to recoup the unpaid business rates.
She added: “As a result of this the company can no longer service the operational costs of the centre.
“The company is disappointed at the closure at the centre however after taking professional advice this difficult decision was the only option available.”
How St Giles Centre tried to fight Edgar Road retail parks
The St Giles Centre and Robertson joined together to fight the decision to ease restrictions on the Edgar Road retail parks.
In 2011 Moray Council lifted the ban on the sale of non-bulky items, a decision described by Elgin Bid at the time as “yet another challenge” for the town centre.
A QC hired jointly by the St Giles Centre and Robertson Property pointed to New Look and Peacocks as evidence of retailers moving from the town centre to retail parks.
They lost the argument on the day and jointly launched a legal challenge to have the decision reversed, which was not successful.
Months later in April 2012 the parties teamed up again to unveil £7 million expansion plans for the St Giles Centre.
It was hoped the vision would nearly double the size of the shopping centre while attracting new retailers following closures including New Look, JJB Sports and Dorothy Perkins.
Despite the proposals getting planning permission in October 2013, they never came to fruition.
How Elgin shopping centre closure news broke
St Giles Centre tenants received confirmation the building would close this month through letters delivered by post this week.
The note said the company had “no option” but to shut after losing access to the income from rents.
It is understood staff employed by some national retailers only heard the news after letters were posted to head offices several hundred miles away.
Moray Chamber of Commerce has offered its support to retailers eager to continue trading in Elgin.
Meanwhile, Moray Council has pledged to work with agencies to examine what support can be offered to firms and staff.
Read more from St Giles Centre
- A Highland property developer, a tobacco giant and a 125-year lease: Who owns the St Giles Centre in Elgin?
- No shops, more than two years late and a bankrupt developer: The saga of how the St Giles Centre in Elgin finally opened
- Retail park rows, supermarket deals and a massive bus station makeover: The St Giles Centre expansion plans in Elgin that never happened
Conversation