The proposal, which is only in the very early stages, aims to inject some life into the ailing main artery of the city, and is being backed by Terry Farrell, who recently completed a three-year spell as the city's design tsar.
A new 'cultural venue' or arts centre could also be built opposite the Ross Bandstand as the council attempts to breathe new life into the street, which tends to shut down once the shops shut at 6pm.
If pushed through, the plans could see a host of opportunities open up for architects, with a chance to work in an area which has so often been suffocated by heritage protection.
Jonathan Guthrie, City Centre Partnership director said: 'While Princes Street is in a spectacular setting, recent research shows a gradual decline in the range and quality of shops.
'Unless significant action is taken, it is predicted that it will slip further down the UK rankings.
'Potential investors could include new shops, new leisure opportunities, new residential and an array of other city centre functions.'