Orchard prime retail space sees strong take-up in 1Q2024, with Central Area rents up 0.2% q-o-q
In 1Q2024, retail place leas in the Central Region fell partially by 0.4% q-o-q, expanding the downturn of 0.1% q-o-q the past quarter. Nevertheless, islandwide prime floor rents were raise by 1% q-o-q, after a 1.2% q-o-q surge the last quarter.
In the Orchard location, great jewellery chain Swarovski launched its largest retail store of about 2,300 sq ft at Wisma Atria. Homegrown womenswear brand Klarra’s opened up a 1,500 sq ft main boutique at ION Orchard. With the improved retail demand, shopping centers such as Paragon and Wisma Atria had obtained complete tenancy by the end of 2023, Wong adds.
The Outside Central Region (OCR) found an unfavorable net holding in retail area of regarding 54,000 sq ft in 1Q2024. Vacancy rate in the OCR raised to 4.4% in 1Q2024 from 3.9% in the previous quarter. CBRE connects it to consolidation in selected trade markets and resistance to high rents.
URA’s 1Q2024 data revealed costs of retail investments were up 1.8% q-o-q, noting the 4th straight quarterly increase. Phua attributes the raise in asset prices to entrepreneurs alloting even more resources to top quality retail properties. Entrepreneurs are attracted to the field caused by the favourable supply-demand fundamentals, positive return spread over funding prices and shortage value of such properties.
Openings prices in the Orchard area were down to 6.4% in 1Q2024 from 8.7% in 4Q2023, the lowest from the start of the pandemic.
J’Den Condo Jurong East Central Road
Angelia Phua, JLL Singapore consulting executive for research & consultancy, indicates that greater operational expenses, eager competition, unpopular retail concepts and switching customer preferences have even resulted in some shop endings and a surge in vacancy rates.
However, the pipeline of business travel and meetings, incentive travel, conventions and exhibitions (BTMICE), improved flight connectivity and capacity with the upcoming Changi Terminal 5 will further increase the tourists recovery and, in turn, the retail field, mentions JLL’s Phua.
The Orchard region found the highest take-up in retail place during the quarter, with net demand of 43,000 sq ft or 80% of complete take-up in the Central Area. Sellers in the Orchard area were stimulated to use up more spot as travellers arrivings in 1Q2024 rose by 49.6% y-o-y, reinforced by a five-fold boost in Chinese visitors, states Song.
“The reseller market remains to be two-tiered,” claims Tricia Song, CBRE head of research for Singapore and Southeast Asia. Additional places remain to see softer need for retail industry space contrasted to prime sector.
For example, fashion trend brand name Zara sealed its outlet in Marina Square shopping mall, while Times Bookstores shuttered its outlets in Plaza Singapura and Waterway Point. After releasing here 2 years earlier on, South Korean convenience store Emart24 closed all three outlets in Singapore in March. Tom & Stefanie, a kids’s fashion store, closed its outlet at West Shopping mall after 25 years.
Still, depended by resilient local area intake and consumer traffic above pre-Covid ranks, sellers continued to seize key retail areas in the OCR, states C&W’s Wong. For instance, the Chinese sportswear brand name Beneunder picked to come out at Westgate Shopping center in Jurong East last year. Hong Kong cosmetics group Sa restarted at Jurong Point previous quarter and is opening 3 more shops in the OCR in 2Q2024.
Retail leas in the Central Location nudged up 0.2% q-o-q, mostly as a result of the Orchard spot, explains Wong Xian Yang, Cushman & Wakefield (C&W) head of research for Singapore and Southeast Asia. On the other hand, retail store hires in the Fringe Locations dropped 1.8% q-o-q in 1Q2024.
