Orchard office rents near 1996 peaks

The landlords are laughing but their tenants in Orchard most likely are not.

Rents in the shopping belt are inches away from the peaks of 1996, the year before a financial crisis shocked the region.

According to a report issued yesterday by CB Richard Ellis (CBRE), this year’s second quarter saw prime Orchard Road rents average $34.40 per square foot (psf) per month, veering close to the levels of $35.10 psf per month about 11 years ago.

“The tides have turned in recent years with the strong rebound of the Singapore economy. Efforts to rejuvenate Orchard Road with a lot more vibrancy are beginning to pay off,” said CBRE’s executive director for retail services Mavis Seow. Malls have become more attractive, as boutiques have been retrofitted while new brands have joined the fashion scene, she explained.

Unfortunately, shop owners are also starting to see red over higher rents. Ms Seow acknowledged she had heard complaints “every now and then”. But the hikes are “not a sharp rise. It’s a gradual increase”.

Back when Orchard Road prime retail rents hit rock bottom in 1998 at $23.40 psf per month, shops were not smiling, either. They were struggling to make ends meet during the initial years after 1997.

Looking ahead, Ms Seow expects prime Orchard retail rentals to grow by 4 to 7 per cent for the full year. This is faster than it did last year, when the pace was between 3 and 6 per cent, she said.

Meanwhile, some firms are feeling the heat of rising rents — especially downtown.

Banking giant HSBC has been moving parts of its operations out of Atrium@Orchard into Eunos and Alexandra premises, insiders told Today. A source said the bank was moving out because rents in Alexandra, reportedly drawing a growing number of financial institutions, are about a third cheaper than at its current office at Atrium.

But the Atrium space is unlikely to stay vacant for long, as other big-name banks are said to have their eye on it.

Source: Today, 29 June 2007

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