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