Orchard prime retail space sees strong take-up in 1Q2024, with Central Area rents up 0.2% q-o-q
In 1Q2024, retail room rents in the Central Area slipped somewhat by 0.4% q-o-q, prolonging the decrease of 0.1% q-o-q the last quarter. Nevertheless, islandwide prime floor rental fees were up by 1% q-o-q, after a 1.2% q-o-q surge the past quarter.
For example, fashion trend brand name Zara shut its store in Marina Square shopping mall, while Times Bookstores shuttered its outlets in Plaza Singapura and Waterway Point. After introducing here 2 years beforehand, South Korean convenience store Emart24 shut all three shops in Singapore in March. Tom & Stefanie, a children’s clothing seller, closed its outlet at West Mall after 25 years.
The Outside Central Region (OCR) found a negative net involvement in retail space of about 54,000 sq ft in 1Q2024. Vacancy rate in the OCR raised to 4.4% in 1Q2024 from 3.9% in the previous quarter. CBRE connects it to incorporation in elected field sectors and resistance to high rents.
Still, underpinned by resistant local usage and buyer traffic above pre-Covid levels, stores continued to take top retail rooms in the OCR, claims C&W’s Wong. As an example, the Chinese sportswear manufacturer Beneunder selected to launch at Westgate Mall in Jurong East in 2023. Hong Kong cosmetics group Sa reopened at Jurong Point last quarter and is opening three even more shops in the OCR in 2Q2024.
In the Orchard area, great jewelry chain Swarovski opened its biggest outlet of about 2,300 sq ft at Wisma Atria. Homegrown womenswear label Klarra’s opened a 1,500 sq ft main boutique at ION Orchard. With the enhanced retail need, malls such as Paragon and Wisma Atria had achieved full tenancy by the end of 2023, Wong adds.
Openings rates in the Orchard region were down to 6.4% in 1Q2024 from 8.7% in 4Q2023, the most affordable since the beginning of the pandemic.
Retail leas in the Central Area pushed up 0.2% q-o-q, mainly because of the Orchard spot, explains Wong Xian Yang, Cushman & Wakefield (C&W) head of research for Singapore and Southeast Asia. In contrast, retail store rentals in the Fringe Areas fell 1.8% q-o-q in 1Q2024.
Angelia Phua, JLL Singapore consulting executive for research & consultancy, indicates that greater operational expenses, keen competition, unpopular retail ideas and changing consumer preferences have actually also brought about some store closings and a surge in vacancy rates.
Nevertheless, the pipeline of business travel and meetings, incentive travel, conventions and exhibitions (BTMICE), improved trip connection and capacity with the upcoming Changi Terminal 5 will even more boost the tourists recovery and, in turn, the retail market, mentions JLL’s Phua.
The Orchard area observed the strongest take-up in retail place throughout the quarter, with final demand of 43,000 sq ft or 80% of complete take-up in the Central Area. Retailers in the Orchard area were stimulated to occupy more spot as visitors landings in 1Q2024 rose by 49.6% y-o-y, boosted by a five-fold boost in Chinese visitors, says Song.
URA’s 1Q2024 information showed rates of retail investments were up 1.8% q-o-q, noting the fourth straight quarterly surge. Phua associates the increase in asset rates to real estate investors designating more capital to high quality retail resources. Clients are attracted to the market due to the favourable supply-demand fundamentals, favorable yield stretch over financing costs and scarcity worth of such assets.
“The retail market remains to be two-tiered,” states Tricia Song, CBRE head of research for Singapore and Southeast Asia. Second places continue to observe softer need for retail industry spot compared to prime sector.
