Landlords try to draw crowds with more F&B tenants

Food and beverage outlets have been eating into commercial and retail spaces at office buildings and shopping malls, as landlords realise the power of such outlets when it comes to drawing the crowds. Property consultants say many landlords now allocate up to 35 per cent of the net lettable floor area to F&B uses, compared to just 5 to 10 per cent a decade ago.

Groups such as families who visit malls for meals “translate into very tangible spillover benefits to the shops in terms of increased footfall and sales”, said Ms Chia Siew Chuin, Research and Advisory Director for Colliers International. “Today’s malls are actually designating an average of about 30 to 35 per cent of their total net floor area to F&B space.”

Bedok Point, for example, has about 70 per cent of its space devoted to F&B. There has also been “an explosion of F&B culture” in the Central Business District, Colliers notes, due to the increase in working population, business travellers and residents there.

Analysts expect F&B operators to continue to look for growth in the CBD, potentially at upcoming projects such as Guoco Tower at Tanjong Pagar, Marina One at Marina Bay, OUE Downtown 1 at Shenton Way or SBF Center at Robinson Road.

According to Colliers, typical rents for ground-floor F&B space in office buildings range from S$14 to S$25 per sq ft per month. Rents for shophouses at Tanjong Pagar range from S$9 to S$12 dollars psf per month. Analysts say rents for F&B premises are likely to remain stable over the next 12 months, as tenants become more resistant to further increases amid rising business costs.

Said Mr Donald Han, Managing Director of Chestertons: “Margins for F&B operators have lessened – two years ago, margins used to be close to 8 to 8.5 per cent, but now it has come down to about 7 per cent. They are probably unable to pay higher rents. We expect the F&B market to see a moderation in rents, especially the non-prime F&B space.” Outlets on the upper floors of retail malls should see a decrease of 3 to 5 per cent, Mr Han believed, while those with prime locations on the ground floor with good exposure to the main road should see a stablisation of rents.

With new cafes and restaurants moving in, Colliers said rents in some neighbourhoods could actually go up. These include spots in the Lavender area, and Hong Kong Street in the city centre.

Source : Channel NewsAsia – 8 Sep 2014

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