Orchard prime retail space sees strong take-up in 1Q2024, with Central Area rents up 0.2% q-o-q
The Outside Central Region (OCR) found a bad net involvement in retail area of pertaining to 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 attributes it to combination in elected field industries and resistance to high rents.
Angelia Phua, JLL Singapore consulting executive for research & consultancy, indicates that higher operational prices, intense competition, unpopular retail ideas and changing consumer choices have also led to some shop endings and a surge in vacancy rates.
In the Orchard area, great jewellery chain Swarovski launched its biggest retail store of around 2,300 sq ft at Wisma Atria. Homegrown womenswear label Klarra’s opened a 1,500 sq ft flagship store at ION Orchard. With the enhanced retail demand, shopping malls such as Paragon and Wisma Atria had achieved complete tenancy by the end of 2023, Wong includes.
Retail leas in the Central Area pushed up 0.2% q-o-q, mostly because of the Orchard region, explains Wong Xian Yang, Cushman & Wakefield (C&W) head of research for Singapore and Southeast Asia. In contrast, retail store hires in the Fringe Locations fell 1.8% q-o-q in 1Q2024.
Vacancy prices in the Orchard area were declining to 6.4% in 1Q2024 from 8.7% in 4Q2023, the most affordable from the onset of the pandemic.
Still, underpinned by tough community intake and shopper traffic above pre-Covid values, sellers remained to seize top retail spaces in the OCR, states C&W’s Wong. As an example, the Chinese sportswear company Beneunder picked to debut at Westgate Shopping center in Jurong East last year. Hong Kong cosmetics group Sa restarted at Jurong Point last quarter and is opening three more outlets in the OCR in 2Q2024.
Nonetheless, the pipeline of business travel and meetings, incentive travel, conventions and exhibitions (BTMICE), enhanced air travel connection and ability with the upcoming Changi Terminal 5 will certainly even more increase the travel and leisure recovery and, in turn, the retail industry, indicates JLL’s Phua.
URA’s 1Q2024 data revealed costs of retail investments were up 1.8% q-o-q, marking the fourth straight quarterly increase. Phua associates the raise in asset prices to entrepreneurs designating more resources to high quality retail assets. Entrepreneurs are drawn to the market because of the beneficial supply-demand fundamentals, favorable yield spread over financing costs and scarcity worth of such assets.
“The retail industry remains to be two-tiered,” says Tricia Song, CBRE head of study for Singapore and Southeast Asia. Secondary areas continue to view softer demand for retail space compared to prime space.
For example, fashion brand name Zara shut its outlet in Marina Square shopping mall, while Times Bookstores shuttered its sites in Plaza Singapura and Waterway Point. After launching here 2 years earlier on, South Korean convenience store Emart24 closed all 3 sites in Singapore in March. Tom & Stefanie, a children’s fashion seller, shut its outlet at West Shopping mall after 25 years.
In 1Q2024, retail space leas in the Central Area fell marginally by 0.4% q-o-q, extending the drop of 0.1% q-o-q the last quarter. However, islandwide prime floor rents were jump by 1% q-o-q, after a 1.2% q-o-q surge the last quarter.
The Orchard location saw the best take-up in retail place throughout the quarter, with final need of 43,000 sq ft or 80% of complete take-up in the Central Location. Stores in the Orchard area were stimulated to use up more spot as travellers landings in 1Q2024 rose by 49.6% y-o-y, reinforced by a five-fold boost in Chinese visitors, states Song.
