Orchard prime retail space sees strong take-up in 1Q2024, with Central Area rents up 0.2% q-o-q
URA’s 1Q2024 data showed rates of retail investments were up 1.8% q-o-q, noting the fourth straight quarterly rise. Phua connects the rise in asset rates to investors allocating even more funding to quality retail assets. Clients are attracted to the sector caused by the beneficial supply-demand basics, favorable return spread over financing costs and scarcity worth of such assets.
Still, depended by tough community usage and consumer traffic over pre-Covid values, retailers remained to take top retail spaces in the OCR, says C&W’s Wong. For instance, the Chinese sportswear manufacturer Beneunder picked to launch at Westgate Shopping center in Jurong East last year. Hong Kong cosmetics group Sa resumed at Jurong Point last quarter and is beginning 3 even more outlets in the OCR in 2Q2024.
For example, clothing brand name Zara sealed its store in Marina Square shopping center, while Times Bookstores shuttered its sites in Plaza Singapura and Waterway Point. After introducing here two years beforehand, South Korean convenience store Emart24 shut all three sites in Singapore in March. Tom & Stefanie, a children’s clothing store, closed its avenue at West Shopping mall after 25 years.
However, the pipeline of business travel and meetings, incentive travel, conventions and exhibitions (BTMICE), boosted trip connection and capacity with the upcoming Changi Terminal 5 will even more improve the tourism recovery and, consequently, the retail sector, notes JLL’s Phua.
In 1Q2024, retail space rents in the Central Area slipped marginally by 0.4% q-o-q, extending the decline of 0.1% q-o-q the previous quarter. Nevertheless, islandwide prime floor rentals were up by 1% q-o-q, after a 1.2% q-o-q rise the last quarter.
Angelia Phua, JLL Singapore consulting supervisor for research study & consultancy, notes that higher functional expenses, keen competitors, unpopular retail ideas and switching consumer choices have actually even led to some store closures and an increase in vacancy rates.
The Orchard location observed the highest take-up in retail sector during the quarter, with net need of 43,000 sq ft or 80% of overall take-up in the Central Area. Retailers in the Orchard location were stimulated to occupy more space as travellers arrivals in 1Q2024 surged by 49.6% y-o-y, strengthened by a five-fold increase in Chinese guests, says Song.
“The retail industry continues to be two-tiered,” claims Tricia Song, CBRE head of study for Singapore and Southeast Asia. Second places continue to view softer need for retail spot contrasted to prime spot.
In the Orchard location, high quality jewelry establishment Swarovski opened its largest store of approximately 2,300 sq ft at Wisma Atria. Homegrown womenswear brand Klarra’s opened up a 1,500 sq ft flagship shop at ION Orchard. With the boosted retail demand, shopping malls which include Paragon and Wisma Atria had obtained full tenancy by the end of 2023, Wong includes.
The Outside Central Region (OCR) found a negative net holding in retail area of regarding 54,000 sq ft in 1Q2024. Vacancy cost in the OCR increased to 4.4% in 1Q2024 from 3.9% in the previous quarter. CBRE associates it to incorporation in selected field markets and strength to high rents.
Vacancy rates in the Orchard area were down to 6.4% in 1Q2024 from 8.7% in 4Q2023, the lowest since the beginning of the pandemic.
Retail rentals in the Central Location nudged up 0.2% q-o-q, primarily due to the Orchard region, explains Wong Xian Yang, Cushman & Wakefield (C&W) head of research for Singapore and Southeast Asia. On the other hand, retail hires in the Fringe Areas dropped 1.8% q-o-q in 1Q2024.