Orchard prime retail space sees strong take-up in 1Q2024, with Central Area rents up 0.2% q-o-q
The Orchard area found the best take-up in retail sector throughout the quarter, with net interest of 43,000 sq ft or 80% of total take-up in the Central Area. Retailers in the Orchard location were propelled to occupy even more spot as travellers arrivings in 1Q2024 rose by 49.6% y-o-y, strengthened by a five-fold rise in Chinese visitors, claims Song.
Retail rents in the Central Location pushed up 0.2% q-o-q, mostly due to the Orchard area, states Wong Xian Yang, Cushman & Wakefield (C&W) head of study for Singapore and Southeast Asia. In contrast, retail store rentals in the Fringe Areas slipped 1.8% q-o-q in 1Q2024.
“The retail industry continues to be two-tiered,” says Tricia Song, CBRE head of research for Singapore and Southeast Asia. Additional locations remain to observe softer need for retail place compared to prime space.
Nevertheless, the pipeline of business travel and meetings, incentive travel, conventions and exhibitions (BTMICE), enhanced trip connectivity and capacity with the upcoming Changi Terminal 5 will certainly further boost the tourism recovery and, in turn, the retail industry, indicates JLL’s Phua.
Angelia Phua, JLL Singapore consulting director for research study & consultancy, indicates that higher operational prices, keen competitors, unpopular retail concepts and changing customer preferences have even resulted in some shop closings and a surge in vacancy rates.
As an example, fashion trend brand name Zara closed its retail store in Marina Square mall, while Times Bookstores shuttered its avenues in Plaza Singapura and Waterway Point. After introducing here two years beforehand, South Korean convenience store Emart24 closed all three shops in Singapore in March. Tom & Stefanie, a children’s clothing merchant, closed its avenue at West Shopping mall after 25 years.
Still, depended by resilient local intake and shopper traffic over pre-Covid values, retailers continued to seize prime retail rooms in the OCR, states C&W’s Wong. For example, the Chinese activewear brand name Beneunder chose to debut at Westgate Shopping mall in Jurong East in 2023. Hong Kong cosmetics group Sa resumed at Jurong Point last quarter and is beginning three even more sites in the OCR in 2Q2024.
One Sophia CEL Development & Singhaiyi Group
In the Orchard location, great jewelry chain Swarovski opened its biggest shop of approximately 2,300 sq ft at Wisma Atria. Homegrown womenswear label Klarra’s opened up a 1,500 sq ft main store at ION Orchard. With the enhanced retail need, shopping centers just like Paragon and Wisma Atria had obtained complete occupancy by the end of 2023, Wong adds.
The Outside Central Region (OCR) saw a negative net holding in retail area of about 54,000 sq ft in 1Q2024. Vacancy cost in the OCR raised to 4.4% in 1Q2024 from 3.9% in the previous quarter. CBRE associates it to incorporation in elected field industries and strength to high rents.
Vacancy rates in the Orchard region were lower to 6.4% in 1Q2024 from 8.7% in 4Q2023, the lowest from the beginning of the pandemic.
URA’s 1Q2024 data showed prices of retail assets were up 1.8% q-o-q, marking the fourth straight quarterly rise. Phua connects the increase in asset rates to entrepreneurs designating more capital to top quality retail properties. Investors are drawn to the sector because of the good supply-demand principles, positive yield spread over funding costs and shortage value of such possessions.
In 1Q2024, retail room leas in the Central Region slipped marginally by 0.4% q-o-q, prolonging the drop of 0.1% q-o-q the past quarter. Nevertheless, islandwide prime floor rentals were jump by 1% q-o-q, after a 1.2% q-o-q surge the last quarter.
