Orchard prime retail space sees strong take-up in 1Q2024, with Central Area rents up 0.2% q-o-q
URA’s 1Q2024 information revealed costs of retail assets were up 1.8% q-o-q, noting the 4th straight quarterly rise. Phua associates the increase in asset costs to real estate investors allocating even more resources to high quality retail assets. Investors are attracted to the market caused by the favourable supply-demand fundamentals, positive yield stretch over financing expenses and scarcity value of such possessions.
“The reseller industry continues to be two-tiered,” claims Tricia Song, CBRE head of research study for Singapore and Southeast Asia. Additional areas continue to view softer interest for retail place compared to prime space.
However, the pipeline of business travel and meetings, incentive travel, conventions and exhibitions (BTMICE), boosted air travel connection and ability with the upcoming Changi Terminal 5 will certainly further improve the travel and leisure recovery and, consequently, the retail field, indicates JLL’s Phua.
The Orchard area found the strongest take-up in retail space throughout the quarter, with net demand of 43,000 sq ft or 80% of complete take-up in the Central Location. Retailers in the Orchard area were stimulated to occupy even more space as tourist arrivals in 1Q2024 surged by 49.6% y-o-y, strengthened by a five-fold rise in Chinese visitors, claims Song.
In 1Q2024, retail room rents in the Central Region dropped somewhat by 0.4% q-o-q, expanding the drop of 0.1% q-o-q the last quarter. Nevertheless, islandwide prime floor rentals were up by 1% q-o-q, after a 1.2% q-o-q increase the past quarter.
As an example, clothing brand Zara shut its store in Marina Square shopping mall, while Times Bookstores shuttered its avenues in Plaza Singapura and Waterway Point. After introducing here two years earlier on, South Korean convenience store Emart24 shut all three outlets in Singapore in March. Tom & Stefanie, a children’s fashion merchant, shut its outlet at West Shopping mall after 25 years.
Retail leas in the Central Area pushed up 0.2% q-o-q, primarily as a result of the Orchard spot, states Wong Xian Yang, Cushman & Wakefield (C&W) head of study for Singapore and Southeast Asia. On the other hand, retail store rentals in the Fringe Areas slipped 1.8% q-o-q in 1Q2024.
Vacancy rates in the Orchard area were down to 6.4% in 1Q2024 from 8.7% in 4Q2023, the most affordable since the start of the pandemic.
Angelia Phua, JLL Singapore consulting supervisor for research & consultancy, indicates that higher working prices, intense competition, unpopular retail ideas and shifting consumer preferences have also brought about some store closures and a surge in vacancy rates.
The Outside Central Region (OCR) observed a negative net involvement in retail area of about 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 associates it to combination in selected trade sectors and resistance to high rents.
In the Orchard area, fine jewelry chain Swarovski launched its largest retail store of about 2,300 sq ft at Wisma Atria. Homegrown womenswear company Klarra’s opened a 1,500 sq ft flagship boutique at ION Orchard. With the improved retail demand, shopping malls just like Paragon and Wisma Atria had achieved full occupancy by the end of 2023, Wong adds.
Still, underpinned by tough local area usage and shopper traffic above pre-Covid values, sellers remained to take top retail rooms in the OCR, states C&W’s Wong. For example, the Chinese sportswear brand Beneunder picked to released at Westgate Shopping center in Jurong East last year. Hong Kong cosmetics group Sa restarted at Jurong Point last quarter and is opening 3 more shops in the OCR in 2Q2024.
