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 supervisor for research & consultancy, mentions that higher functional costs, eager competition, unpopular retail concepts and shifting consumer tastes have actually also led to some store endings and an increase in vacancy rates.
Still, depended by tough local intake and consumer traffic over pre-Covid levels, merchants remained to grab top retail areas in the OCR, says C&W’s Wong. For instance, the Chinese sportswear brand name Beneunder picked to come out at Westgate Mall in Jurong East last year. Hong Kong cosmetics group Sa reopened at Jurong Point last quarter and is opening 3 more shops in the OCR in 2Q2024.
Openings prices in the Orchard area were down to 6.4% in 1Q2024 from 8.7% in 4Q2023, the most affordable ever since the onset of the pandemic.
As an example, fashion trend brand Zara shut its outlet in Marina Square shopping mall, while Times Bookstores shuttered its shops in Plaza Singapura and Waterway Point. After releasing here two years earlier on, South Korean convenience store Emart24 shut all three sites in Singapore in March. Tom & Stefanie, a kids’s clothing store, closed its outlet at West Shopping mall after 25 years.
“The retail market remains to be two-tiered,” states Tricia Song, CBRE head of study for Singapore and Southeast Asia. Secondary areas continue to see softer interest for retail space contrasted to prime spot.
Retail rents in the Central Area pushed up 0.2% q-o-q, mostly as a result of the Orchard area, explains Wong Xian Yang, Cushman & Wakefield (C&W) head of study for Singapore and Southeast Asia. On the other hand, retail industry rents in the Fringe Locations slipped 1.8% q-o-q in 1Q2024.
The Orchard region found the best take-up in retail sector throughout the quarter, with net demand of 43,000 sq ft or 80% of overall take-up in the Central Area. Retailers in the Orchard location were spurred to use up more space as travellers arrivals in 1Q2024 rose by 49.6% y-o-y, reinforced by a five-fold rise in Chinese visitors, states Song.
URA’s 1Q2024 information revealed prices of retail investments were up 1.8% q-o-q, marking the fourth straight quarterly increase. Phua associates the boost in asset costs to entrepreneurs designating more resources to quality retail resources. Clients are drawn to the industry caused by the favourable supply-demand principles, positive yield spread over funding expenses and shortage value of such possessions.
Nevertheless, the pipeline of business travel and meetings, incentive travel, conventions and exhibitions (BTMICE), enhanced flight connectivity and capacity with the upcoming Changi Terminal 5 will further boost the tourists recovery and, consequently, the retail sector, indicates JLL’s Phua.
In the Orchard location, fine jewelry establishment Swarovski opened its biggest shop of about 2,300 sq ft at Wisma Atria. Homegrown womenswear label Klarra’s opened up a 1,500 sq ft main boutique at ION Orchard. With the boosted retail demand, malls such as Paragon and Wisma Atria had obtained full tenancy by the end of 2023, Wong adds in.
The Outside Central Region (OCR) observed a negative net involvement in retail space 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 connects it to combination in selected business sectors and prevention to high leas.
In 1Q2024, retail place leas in the Central Area fell marginally by 0.4% q-o-q, extending 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 rise the last quarter.
