Orchard prime retail space sees strong take-up in 1Q2024, with Central Area rents up 0.2% q-o-q
URA’s 1Q2024 data revealed rates of retail assets were up 1.8% q-o-q, noting the fourth straight quarterly rise. Phua associates the increase in asset costs to investors alloting even more capital to top quality retail resources. Entrepreneurs are drawn to the industry due to the good supply-demand fundamentals, positive yield spread over financing costs and shortage worth of such properties.
As an example, clothing brand name Zara shut its shop in Marina Square mall, while Times Bookstores shuttered its shops in Plaza Singapura and Waterway Point. After releasing here two years beforehand, South Korean convenience store Emart24 closed all 3 sites in Singapore in March. Tom & Stefanie, a children’s clothing retailer, closed up its shop at West Mall after 25 years.
The Outside Central Region (OCR) found an unfavorable net holding in retail place of regarding 54,000 sq ft in 1Q2024. Vacancy price in the OCR increased to 4.4% in 1Q2024 from 3.9% in the previous quarter. CBRE associates it to incorporation in selected business industries and prevention to high rental fees.
The Orchard area observed the highest take-up in retail sector during the quarter, with net need of 43,000 sq ft or 80% of complete take-up in the Central Area. Retailers in the Orchard location were spurred to occupy even more spot as travellers arrivings in 1Q2024 surged by 49.6% y-o-y, boosted by a five-fold boost in Chinese guests, claims Song.
Still, underpinned by resilient local area consumption and customer traffic over pre-Covid ranks, merchants remained to seize top retail areas in the OCR, states C&W’s Wong. For instance, the Chinese activewear manufacturer Beneunder picked to released at Westgate Mall in Jurong East last year. Hong Kong cosmetics group Sa reopened at Jurong Point previous quarter and is opening 3 even more shops in the OCR in 2Q2024.
Retail rents in the Central Location pushed up 0.2% q-o-q, mainly due to the Orchard spot, says Wong Xian Yang, Cushman & Wakefield (C&W) head of study for Singapore and Southeast Asia. On the other hand, retail rents in the Fringe Locations fell 1.8% q-o-q in 1Q2024.
In the Orchard location, fine jewelry establishment Swarovski started its largest outlet of around 2,300 sq ft at Wisma Atria. Homegrown womenswear brand Klarra’s opened up a 1,500 sq ft main boutique at ION Orchard. With the boosted retail need, shopping centers just like Paragon and Wisma Atria had achieved full occupancy by the end of 2023, Wong adds in.
Openings prices in the Orchard location were lower to 6.4% in 1Q2024 from 8.7% in 4Q2023, the lowest ever since the start of the pandemic.
Angelia Phua, JLL Singapore consulting director for research & consultancy, mentions that higher functional costs, intense competition, unpopular retail ideas and changing consumer preferences have actually also resulted in some store endings and a surge in vacancy rates.
In 1Q2024, retail place rentals in the Central Region slipped somewhat by 0.4% q-o-q, expanding the decline of 0.1% q-o-q the past quarter. Nevertheless, islandwide prime floor rentals were raise by 1% q-o-q, after a 1.2% q-o-q surge the last quarter.
“The reseller market remains to be two-tiered,” states Tricia Song, CBRE head of research for Singapore and Southeast Asia. Secondary places continue to see softer need for retail industry place compared to prime space.
However, the pipeline of business travel and meetings, incentive travel, conventions and exhibitions (BTMICE), improved flight connectivity and capacity with the upcoming Changi Terminal 5 will certainly further boost the travel and leisure recovery and, in turn, the retail market, mentions JLL’s Phua.
