A number of shopping malls opened in Orchard Road in the last two years, increasing the prime shopping belt’s retail space by about 30 per cent, but not everyone at these new spaces has been doing well.

Only last week, tenants at 313 Somerset reportedly petitioned for lower rentals, complaining of poor business, raising questions over whether there is an oversupply of retail space in the area.

Mr Colin Tan, head of research and consultancy at Suntec Chesterton International, said: “If you go down to Orchard Road and visit some of these places, you’ll see that there is a high turnover of tenants. Tenants, which may have signed three years ago, are now finding it very hard to cope, so you see a lot of empty shops or hoardings or signs.”

There were signs of sluggish demand creeping in during the first quarter this year. Vacancy rates for Orchard Road retail space inched up to 6 per cent from 5 per cent from the fourth quarter last year.

Mr Nicholas Mak, head of research and consultancy at SLP International, said: “In the last two quarters, demand has not been as fast. As a result, some of the malls may have to adjust their rentals to attract new tenants or retain some of the existing ones.”

Others say the situation may not be so straightforward.

Senior manager for research at Cushman & Wakefield Ong Kah Seng said: “There has been a long dearth of major malls in Orchard Road – for more than a decade. The new malls actually refresh the identity of Orchard Road but require some time to be adjusted by market participants as they arrived as a surge after a hiatus.”

Source : Today – 28 May 2011

Shopping malls along Orchard Road are going for facelifts even though they are relatively new, due to rising competition from brand-new shopping centres – which are forcing the existing ones to spruce up their act.

Instead of refurbishing a shopping centre after a decade or two, mall owners are tweaking the look and feel of even relatively new buildings.

Analysts say this is because the ownership of many shopping centres has changed hands, and the new landlords are real-estate investment trusts that want to earn high rental incomes to keep their investors satisfied.

Head of research for Jones Lang Laselle (SEA), Dr Chua Yang Liang says the arrival of real-estate investment trusts (REITs) have made mall operators more aggressive.

“Because at the end of the day, you have your major shareholders, it’s about income returns on the asset itself, so there is motivation to make sure their assets are viable and continue to attract the tenants”, said Dr Chua.

Wisma Atria shopping mall on Orchard Road will be getting a facelift by the third quarter of next year.

It is owned by Starhill Global REIT, which plans to enhance the mall’s positioning by redeveloping its frontage.

Meanwhile, CapitaMall Trust has announced asset enhancements initiatives in Atrium@Orchard.

Analysts say the trend is likely to continue.

“So there is that change in structure, and definitely going forward, I think you may see the retail scene, especially along Orchard Road changing along towards that direction”, said Dr Chua.

“Where the lifespan of the building becomes shorter, and the need to upgrade becomes more pressing.”

Following the launch of several new malls along Orchard Road over the last two years – such as the Knightsbridge at Grand Park Orchard hotel, Ion Orchard, Orchard Central and 313@Somerset – analysts expect the premier shopping belt to see less new addition of retail space next year.

“There is already a fair amount of malls and that have already cropped up. So after this round of refurbishment, the situation will probably stabilize over the next couple of years”, said Mr Wong Sui Jau, general manager of Fundsupermart.

Currently, the monthly gross rent in the Orchard Road area is between S$20 and S$40 per square foot.

According to Jones Lang LaSalle, prime rents have risen 1 per cent over the past one year.

Source : Channel NewsAsia – 2 Mar 2011

Analysts say malls across Singapore will be stepping up their game next year, now that retail spending looks set to increase due to robust growth and higher tourism arrivals.

More landmark developments will be open from next year, on the stretch of the iconic Orchard Road.

Orchard Road Business Association executive director Steven Goh said: “…Orchard Road is a street where it continues to reinvent itself.

“And you will see another opening of a new mall, Scotts Square, in the third quarter of 2011, (and) the anticipated H&M opening in the third quarter, as well as (at) the old Specialist Centre and Orchard Emerald.

“It’s been announced they are going to open up 250,000 square feet of retail, hotel and office space.

But with so many malls on Orchard Road, some retailers may find it hard to draw in the crowds.

Others believe that with more hotels and residences on Orchard Road, retail spending will surge.

“…Orchard Road is traditionally a launching pad for most of the new international brands coming to town. So we will foresee that to continue (evolving) along Orchard Road,” Mr Goh said.

“At the same time, there will be new hotel rooms — at least 500 to 600 (of them) on Orchard Road in the next four years”.

Orchard Residences, which has 175 units, will be completed by end of this year, while the 338-unit Scotts Square will be completed in 2011.

Meanwhile, older malls are also seeking a fresh start amid the stiff competition.

For example, the Tanglin Shopping Centre and the former Paradiz Centre POMO are now up for sale.

More suburban malls like Nex should emerge soon enough.

Temasek Polytechnic’s Retail Management course manager Samuel Tan said: “I think the suburban malls have a lot to offer because they have strong catchment and good traffic footfall.

“That itself forms a very strong reason for the shopping mall to be set up there.

“Nex has two supermarkets under one roof — they have FairPrice as well as Cold Storage, they have Kopitiam as well as other other food court operators. I think all this does give the consumers better variety”.

While shops can look forward to thicker profits, the outlook for retail investment is cautious.

Colliers International director of retail Charles Ng said: “We have the Ion, Orchard Central, 313, Mandarin Gallery and Knightsbridge. So that’s quite a lot of space on Orchard Road.

“There’s abundant supply, but having said that, (the) take up rate is quite healthy and so rents have remained stable as a result of that”.

Rentals for prime shopping space are about S$40 per square foot per month.

And the year ahead should see retail rentals growing slightly.

“With the economy growing at four to six per cent, I think retail rents will even inch up if you ask me. For suburban areas, maybe one to two per cent at least,” Mr Ng said.

“Orchard Road should see a bigger growth – it can grow up to about five per cent.”

Analysts add that with the new Marina Bay Sands, nearby office buildings in the central business district will attract big brand names.

MAC Cosmetics, The Hourglass and Swarovski Crystals are some stores which have set up branches in the district.

Source : Channel NewsAsia – 23 Dec 2010