Shopping mall rents in Singapore fell during the first quarter and will likely decline further over the next 12 months, hurt by falling visitor arrivals and weak retail sales, property services firm Cushman & Wakefield said on Wednesday (Apr 8).
Cushman said the biggest drop was seen in city fringe areas such as the City Hall and Marina Centre area, where rents fell 1.3 per cent quarter-on-quarter to S$23.68 per square foot per month (psf/mo).
Average monthly gross rents of prime retail space in the Orchard Road submarket slipped marginally by 0.8 per cent on-quarter to S$38.20 psf/mo, while average monthly gross rents for prime retail space in suburban locations edged down 0.5 per cent from the preceding quarter to S$31.85 psf/mo.
“Unlike the city fringe submarket, Orchard Road is still highly sought after by international retailers looking to open their first or flagship stores. Thus, rents of major retail malls in Orchard Road have held relatively firm even though economic indicators are signalling a down market,” Cushman said in a report.
It added the suburban market experienced the smallest drop in rents due to the resilient nature of suburban malls.
2015 A CHALLENGING YEAR
Looking ahead, Cushman said 2015 will be a challenging year as retail spending is expected to take a hit due to the slowdown in visitor arrivals and weaker consumer confidence.
“Consolidation of space among various trades has been more evident since the start of 2015. Fashion apparel and accessories brand Lowrys Farm exited the market earlier this year, while other tenants such as Marks & Spencer and Cold Storage in Centrepoint, John Little stores at Marina Square and Tiong Bahru Plaza, and Japanese department store Isetan at Wisma Atria are expected to cease operations by the second quarter of 2015,” Cushman said.
It added that Lifebrandz is also expected to pull out five nightspots from The Cannery at Clarke Quay, surrendering 57,000 square feet of space.
Space consolidation is likely to continue, particularly for retailers which expanded aggressively during the boom time but have started to experience rising business costs, the property services firm added.
Source : Channel NewsAsia – 8 Apr 2015