Electric Circus on Market St.

The Fruitmarket Gallery on Market Street, next to Waverley Station, is looking to boost its facilities as part of a major £11 million revamp.

And now the city council – which owns both the buildings in question – has given the go-ahead for the gallery to take over the neighbouring Electric Circus building when the club’s lease ends.

It is understood the owners of the bar and venue were planning to close and have been in long-running talks with the Fruitmarket.

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Fiona Bradley, director of the Fruitmarket Gallery, said: “We started looking into the gap between our two buildings, and during those discussions, the proprietor said why don’t we see if we can do something clever, and take on their lease? It’s the Holy Grail really, to expand next door.”

Bosses said the extension would allow the gallery to “greatly improve and enhance” its exhibition space – as well as boosting the cafe, library and bookshop.

And while full timescales are not yet known, it is understood the move could be made in the next two years.

The Heritage Lottery Fund has invited the Fruitmarket Gallery to apply for a major grant of between £2m and £5m towards the redevelopment.

Meanwhile, council documents show the gallery will pay £112,500 a year in rent under the new arrangements, which will be reduced for the first six years in recognition of the substantial investment it is making in the property.

A report drawn up by officials adds: “The tenant of the nightclub has indicated that they wish to cease trading at the facility and has been offering a proposed assignation.

“Consequently, both tenants have been in discussion regarding a proposed assignation and have reached in principle agreement, subject to council approval.”

But Edinburgh music industry figures said it would be a “great shame” for the city to lose one of its most popular gig venues.

A string of high-profile venues have been shut over the last decade, including the former Picture House on Lothian Road and The Venue on Calton Road.

Nick Stewart, manager of Cowgate nightclub Sneaky Pete’s, said: “Edinburgh needs gig venues, and Electric Circus has always been a fantastic venue. If it’s going, it will be sorely missed.”

The owner of Electric Circus could not be reached for comment.

A council spokeswoman said: “As a council we are committed to improving the city’s cultural infrastructure and supportive of the Fruitmarket Gallery’s exciting plans. The development of the venue’s presence and profile in the city centre will be enhanced by partnership working and will build on the Fruitmarket’s success as one of Europe’s foremost contemporary visual arts galleries.”