Orchard prime retail space sees strong take-up in 1Q2024, with Central Area rents up 0.2% q-o-q
Angelia Phua, JLL Singapore consulting director for research study & consultancy, notes that higher functional expenses, eager competition, unpopular retail concepts and changing consumer preferences have also brought about some store endings and a surge in vacancy levels.
For instance, fashion trend brand Zara closed its retail store in Marina Square mall, while Times Bookstores shuttered its outlets in Plaza Singapura and Waterway Point. After releasing here two years beforehand, South Korean convenience store Emart24 closed all 3 shops in Singapore in March. Tom & Stefanie, a kids’s fashion store, closed up its shop at West Shopping center after 25 years.
The Outside Central Region (OCR) saw a bad net holding in retail area of about 54,000 sq ft in 1Q2024. Vacancy cost in the OCR boosted to 4.4% in 1Q2024 from 3.9% in the previous quarter. CBRE associates it to consolidation in chosen trade sectors and resistance to high rental fees.
Nevertheless, the pipeline of business travel and meetings, incentive travel, conventions and exhibitions (BTMICE), enhanced air travel connection and capacity with the upcoming Changi Terminal 5 will further boost the tourists recovery and, consequently, the retail field, indicates JLL’s Phua.
URA’s 1Q2024 data revealed prices of retail assets were up 1.8% q-o-q, noting the fourth straight quarterly surge. Phua associates the raise in asset costs to investors designating more funding to high quality retail properties. Clients are attracted to the field caused by the good supply-demand fundamentals, positive return stretch over funding prices and scarcity value of such properties.
Openings rates in the Orchard location were declining to 6.4% in 1Q2024 from 8.7% in 4Q2023, the lowest ever since the start of the pandemic.
Retail leas in the Central Location nudged up 0.2% q-o-q, primarily because of the Orchard region, says Wong Xian Yang, Cushman & Wakefield (C&W) head of research for Singapore and Southeast Asia. In contrast, retail rents in the Fringe Areas fell 1.8% q-o-q in 1Q2024.
The Orchard area observed the highest take-up in retail sector during the quarter, with final interest of 43,000 sq ft or 80% of total take-up in the Central Area. Retailers in the Orchard location were stimulated to occupy more location as visitors arrivings in 1Q2024 climbed by 49.6% y-o-y, strengthened by a five-fold rise in Chinese visitors, claims Song.
Lentor Modern showflat location
Still, underpinned by resilient local area usage and consumer traffic above pre-Covid values, retailers remained to take top retail spaces in the OCR, states C&W’s Wong. For example, the Chinese activewear company Beneunder picked to come out at Westgate Mall in Jurong East last year. Hong Kong cosmetics chain Sa reopened at Jurong Point last quarter and is opening 3 more shops in the OCR in 2Q2024.
In the Orchard location, great jewelry establishment Swarovski opened its largest shop of around 2,300 sq ft at Wisma Atria. Homegrown womenswear label Klarra’s opened a 1,500 sq ft main store at ION Orchard. With the improved retail demand, shopping malls which include Paragon and Wisma Atria had achieved complete tenancy by the end of 2023, Wong adds.
In 1Q2024, retail place rents in the Central Region slipped somewhat by 0.4% q-o-q, prolonging the decrease of 0.1% q-o-q the last quarter. However, islandwide prime floor rental fees were jump by 1% q-o-q, after a 1.2% q-o-q increase the previous quarter.
“The reseller market remains to be two-tiered,” states Tricia Song, CBRE head of study for Singapore and Southeast Asia. Additional areas continue to see softer demand for retail spot compared to prime space.
