When it comes to starting or expanding a business, finding the right retail space is crucial. The location, size, condition, lease terms, and amenities of a space can all have a major impact on the success of a business. In Singapore, where retail space is in high demand, it’s important to understand the factors to consider when renting a retail space. This article will guide readers through the process of finding a retail space in Singapore, highlighting key considerations such as location, size, lease terms, amenities, competition and GTO and Rent.
It’s important to understand that location is one of the most crucial factors in finding a retail space. A prime location can attract a high volume of foot traffic, increase visibility for your business and give you an edge over your competition. But it also important to evaluate the zoning regulations and future development plans for the area, and how it will impact your business.
Additionally, finding a space that meets the needs of your business in terms of size and condition is essential. The lease terms and amenities offered by a space can also play a significant role in the success of your business. We’ll also take a look at GTO and Rent, how it is charged and how to ensure it is fair and reasonable.
In this article, we’ll delve into these factors in more detail, providing practical tips and advice to help you find the perfect retail space for your business in Singapore.
Location is one of the most important factors to consider when looking for a retail space in Singapore. The ideal location should be easily accessible (whether by car, public transportation, or on foot) and have high foot traffic. Some popular locations in Singapore include:
- Orchard Road: This is one of the most popular shopping districts in Singapore and is home to many luxury and high-end brands.
- Marina Bay: This area is known for its luxury shopping, dining, and entertainment options. It is also home to several iconic landmarks, such as Marina Bay Sands and Gardens by the Bay.
- Clarke Quay: This is a popular nightlife and entertainment destination, with a wide variety of restaurants, bars, and clubs.
- Bugis: This area is known for its street markets and is a popular destination for budget-conscious shoppers.
- Holland Village: This is a trendy and upscale neighborhood, popular for its boutiques, cafes, and restaurants.
- Vivo City: This is one of the largest shopping malls in Singapore and is known for its wide variety of shops, restaurants and entertainment options.
- Tiong Bahru: This neighborhood is known for its historic architecture, independent boutiques, and trendy cafes.
- Clarke Quay and Robertson Quay: These areas are popular for their dining and entertainment options along the Singapore River.
It’s worth noting that the popularity of locations can change over time as the city develops. It’s always a good idea to look into the recent and future development plans in the area before deciding on a location.
Size is another important factor to consider when looking for a retail space in Singapore. The size of the space will determine how much room you have to work with and how your business can be laid out.
When looking for a retail space, it’s important to consider:
- The size of your business: Make sure that the space is large enough to accommodate your inventory and any displays or fixtures you may need.
- The layout of the space: Consider the layout of the space and how it can be used to maximize sales and customer flow.
- The zoning of the space: Make sure that the space is zoned for commercial use, and that you can use it for your intended business.
- The flexibility of the space: It’s worth looking for a space that can be easily adapted to suit the changing needs of your business.
- The cost of the space: The size of the space will also affect the rent, so it’s important to consider how much you can afford to pay.
- The future expansion: Consider the possibility of future expansion, you may want to look for a space that can accommodate this in the future.
In Singapore, retail spaces are usually measured in square feet (sq ft) or square meters (sq m). It’s recommended to consult with a real estate agent or a business consultant to help you make an informed decision about the size of the space you need for your business.
Rent and GTO
Rent is a major expense when renting a retail space in Singapore, and it’s important to understand how landlords charge rent in order to make an informed decision. It’s important to keep in mind that the rent can vary depending on the location of the space. Spaces in popular areas with high foot traffic, such as Orchard Road or Marina Bay, will typically have higher rent than spaces in less popular areas.
In Singapore, the most common way that landlords charge rent is on a per square foot (psf) basis. This means that the rent will be calculated based on the size of the space you are renting. For example, if the rent is $10psf, and you are renting a 1,000 square foot space, your monthly rent would be $10,000.
One may also need to know on GTO, or Gross Turnover Rental, a method of calculating rent for retail spaces in Singapore especially in shopping malls. In this method, the landlord will charge a percentage of the tenant’s gross sales as rent, rather than charging a fixed rent per square foot. The landlord may also charge a fixed rent plus a GTO component. The calculation of gross turnover does not include any selling, general, and administrative expenses, it is the total amount of inflow going through your POS machine.
This GTO method of calculating rent can be beneficial for tenants, as it allows for a more flexible rental structure that can fluctuate with the tenant’s sales. However, this method can also be more risky for tenants, as it requires them to disclose their sales figures to the landlord and may result in higher rent if sales are higher than expected.
Landlords will typically require a minimum guarantee from the tenant, which is a minimum amount of rent that the tenant must pay regardless of their sales. This minimum guarantee is usually a fixed amount or a percentage of the projected sales. The percentage charged will vary depending on the agreement between the landlord and tenant, but it is usually between 1% to 20% of the tenant’s gross sales. For example, if the tenant agrees to a 10% GTO rental or a fixed rent of $8,000 whichever higher and has a monthly gross sales of $100,000, the monthly rent will be $10,000.
Additionally, landlords may also charge additional fees such as service charges, maintenance fees, and property taxes. These fees may be included in the rent or charged separately.
Do consider the length of the lease when discussing the rent with the landlord. Short-term leases may have a higher rent than long-term leases, thus do consider the long-term viability of your business and if a long-term lease may be more beneficial. Landlords in general will prefer a long-term lease which is typically 3 years.
It’s also important to be aware that the rent may be subject to increase over the course of the lease. It is important to understand the terms of the lease and how the rent may be increased over time. Additionally, it’s important to budget for any potential increases in rent and to consider whether they are reasonable and fair.
In summary, GTO and Rent are important factors to consider when renting a retail space in Singapore. It’s important to understand how these costs are calculated, to ensure they are fair and reasonable and to budget accordingly.
Condition of Space and What to Look Out For
The condition of the retail space is an important factor to consider when looking for a space to rent. It’s important to inspect the space and make sure that it is in good condition and that any necessary repairs or renovations can be made.
When inspecting the space, it’s important to look out for the following:
- Structural integrity: Look for any signs of damage or wear, such as cracks in the walls or ceiling, or water damage.
- Electrical and plumbing: Make sure that the electrical and plumbing systems are in good working order. Check for any exposed wires or leaky pipes.
- Lighting: Ensure that the space has adequate lighting and that it can be easily changed or upgraded as needed.
- Flooring: Look at the condition of the flooring and see if it needs to be replaced or repaired.
- HVAC: Inspect the heating, ventilation, and air conditioning systems to ensure that they are in good working order.
- Ceiling: Check the condition of the ceiling and see if it needs to be repainted or repaired.
- Fire safety: Make sure that the space is equipped with fire alarms and sprinklers, and that they are in good working order.
- Accessibility: Inspect the space to ensure that it is accessible for people with disabilities.
Do keep in mind that any repairs or renovations that need to be made to the space will be the responsibility of the tenant. It’s recommended to consult with a contractor or interior designer to help you understand the cost of any necessary repairs or renovations before making a decision. It’s also worth discussing with the landlord the responsibility of repairs or maintenance and make sure it’s clearly stated in the lease agreement.
In conclusion, finding the right retail space in Singapore requires careful consideration of a number of factors, including location, unit size, rent and GTO. It’s important to do your research and to carefully evaluate each of these factors before making a decision.
By taking the time to consider each of these factors and to carefully evaluate the options available, you can increase the chances of success for your business and find a retail space that is well-suited to your needs.
This has been Part 1 of a 2-part series on finding the perfect retail space in Singapore. Part 2 will delve deeper in the topics on the condition of the space, lease terms, competition, amenities, zoning, and future development plans. It will also provide tips on how to negotiate with landlords and how to rent a retail space in Singapore for your business. Stay tuned for the next installment!