Going on despite the downtown

Far East’s West Coast Plaza 70 per centleased before launch

Never mind the news about consumers tightening their belts or forgoing frills in the face of an economic downturn.

As far as developer Far East Organization is concerned, tenants of West Coast Plaza – its latest refurbished suburban retail offering – are all geared up for business for the upcoming festive season.

Formerly known as Ginza Plaza, the mall is now close to 70 per cent leased, said Far East deputy director for retail management Susan Leng. It has a net lettable area of 160,000 sq ft.

If negotiations involving two major tenants in the fashion industry work out, it could bring tenancy beyond 70 per cent when the mall has its soft launch on Nov 15, Ms Leng said.

When asked whether the timing may have contributed to a less than full occupancy, Ms Leng said the developer had to fulfil its promise made about a year ago.

“There’s the commitment to our tenants – we must open. Because they would have planned to open and we are nearing the Christmas period,” she said.

“Seventy per cent occupancy in such times; I think it’s quite decent.”

Mr Colin Tan, Chesterton Suntec International’s head of research and consultancy, however, believes the performance could be better.

“For retail, you must always open at full occupancy or close to 100 per cent. It doesn’t look good when the mall opens and there are empty spaces,” he said.

“Shopping centres are visible, so when you see empty lots, it doesn’t look good, so usually they’ll lower rents so that occupancy will go up, unless due to some reason like Sars, you lower the rents – nobody would also want to go in.”

Although she acknowledged that the mall is not immune to the current downturn, with “a couple” of tenants withdrawing due to the economic conditions, Ms Leng said suburban malls are generally more sheltered from world events than urban retail developments.

“As a suburban mall, we are meeting basic needs of students, workers in the region and residents. The turnover will not fluctuate due to events like F1 or international conventions. Conversely, we are also going to be protected from major cycles, ” she said.

Statistics from a recent CapitaMall Trust presentation bear this statement out. According to research done by Jones Lang La Salle, DTZ and CapitaLand, suburban retail rentals have showed greater resilience to economic downturns since 1993 than retail rentals in Orchard Road.

Rents for West Coast Plaza range from about $7 per square foot (psf) perĀ  month for anchor tenants to “high 20s” for the speciality stores, depending on size and location, said Ms Leng. That was little changed from the $8 to $25 psf range quoted by marketing agent Knight Frank about a year ago.

Still, Mr Tan expects Far East to lower rents to secure leases for the remaining spaces available in West Coast Plaza.

“While I would say that suburban places always have interest from retailers, the question now is whether they can afford it,” he said.

But managing director for Cushman & Wakefield Donald Han believes not running at full occupancy could be a marketing strategy on the developer’s part to gauge consumers’ response for the launch.

West Coast residents Today spoke to generally welcomed the rebranding and the new tenant mix, which includes popular eateries such as New York New York, Sushi Tei and anchor tenants like Cold Storage and Popular.

Source : Today – 23 Oct 2008

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