Orchard prime retail space sees strong take-up in 1Q2024, with Central Area rents up 0.2% q-o-q
Retail rentals in the Central Location pushed up 0.2% q-o-q, mainly because of the Orchard region, explains Wong Xian Yang, Cushman & Wakefield (C&W) head of study for Singapore and Southeast Asia. On the other hand, retail store rents in the Fringe Locations slipped 1.8% q-o-q in 1Q2024.
URA’s 1Q2024 information revealed rates of retail assets were up 1.8% q-o-q, noting the fourth straight quarterly surge. Phua connects the boost in asset prices to entrepreneurs alloting even more funding to high quality retail properties. Clients are drawn to the field caused by the beneficial supply-demand principles, positive return spread over financing costs and scarcity worth of such assets.
In the Orchard location, high quality jewelry chain Swarovski launched its biggest retail store of about 2,300 sq ft at Wisma Atria. Homegrown womenswear brand name Klarra’s opened a 1,500 sq ft flagship shop at ION Orchard. With the boosted retail demand, shopping malls such as Paragon and Wisma Atria had obtained full occupancy by the end of 2023, Wong adds.
“The retail industry continues to be two-tiered,” states Tricia Song, CBRE head of research study for Singapore and Southeast Asia. Secondary locations remain to view softer interest for retail space compared to prime spot.
Still, depended by resistant local area usage and shopper traffic over pre-Covid values, merchants continued to take prime retail rooms in the OCR, says C&W’s Wong. For example, the Chinese activewear brand Beneunder chose to debut at Westgate Shopping center in Jurong East in 2023. Hong Kong cosmetics group Sa restarted at Jurong Point previous quarter and is opening three more outlets in the OCR in 2Q2024.
The Orchard region saw the strongest take-up in retail place throughout the quarter, with final need of 43,000 sq ft or 80% of complete take-up in the Central Area. Stores in the Orchard area were stimulated to use up even more space as visitors landings in 1Q2024 climbed by 49.6% y-o-y, reinforced by a five-fold boost in Chinese visitors, says Song.
The Outside Central Region (OCR) saw an unfavorable net holding in retail space of regarding 54,000 sq ft in 1Q2024. Vacancy price in the OCR raised to 4.4% in 1Q2024 from 3.9% in the previous quarter. CBRE connects it to consolidation in elected business markets and resistance to high rents.
Nonetheless, the pipeline of business travel and meetings, incentive travel, conventions and exhibitions (BTMICE), boosted flight connectivity and ability with the upcoming Changi Terminal 5 will even more boost the tourists recovery and, in turn, the retail field, notes JLL’s Phua.
Openings prices in the Orchard location were declining to 6.4% in 1Q2024 from 8.7% in 4Q2023, the most affordable from the start of the pandemic.
In 1Q2024, retail space rents in the Central Area slipped marginally by 0.4% q-o-q, prolonging the drop of 0.1% q-o-q the previous quarter. Nevertheless, islandwide prime floor rentals were jump by 1% q-o-q, after a 1.2% q-o-q increase the last quarter.
For instance, fashion trend brand Zara closed its outlet in Marina Square shopping mall, while Times Bookstores shuttered its outlets in Plaza Singapura and Waterway Point. After launching here 2 years earlier, South Korean convenience store Emart24 shut all 3 outlets in Singapore in March. Tom & Stefanie, a little ones’s clothing store, shut its shop at West Mall after 25 years.
Angelia Phua, JLL Singapore consulting executive for research & consultancy, mentions that greater operational prices, keen competitors, unpopular retail concepts and changing consumer preferences have actually also brought about some shop closings and a surge in vacancy rates.
