Prime retail rents mostly flat in 1Q2025 as F&B scene shows signs of oversupply: Knight Frank
Singapore prime retail leas remained mostly flat in 1Q2025 amidst a retail setting that continues to encounter ascending operating costs and labor restraints, says Knight Frank Singapore. According to a research report posted by the business in April, prime retail rentals in Orchard averaged at $31.20 psf per month (pm) past quarter, inching up just 0.4% q-o-q.
The largely inactive leas comply with combined retail sales productivity in 1Q2024. While data from the Singapore Department of Statistics presented retail sales leaving out motor vehicles reviving from a year-end downturn to hit $4 billion in January on the back of Chinese New Year events, it ultimately tumbled to $3.2 billion in February before climbing back up to $4.2 billion in March.
Prime retail areas in the Marina Centre, City Hall and Bugis spots averaged at $26.40 psf pm in 1Q2025, up 0.6%, whilst city-fringe prime retail rents dipped 0.3% q-o-q to $24 psf pm. Suburban prime retail leas averaged $26.80 psf pm, up 0.3% q-o-q.
Simultaneously, the F&B setting has actually observed an increased pace of restaurants establishing and shutting down, adds the Knight Frank statement. In 1Q2025, F&B brands consisting of Eggslut, Manhattan Fish Market, Prata Wala and Burge & Lobster shuttered their shops, while hotpot chain Haidilao closed two shops.
Prospective measures include restricting the number of F&B permits issued within a particular location, capping the percentage of net lettable area designated for F&B in a mall to a stakeholder-reviewed ratio, or imposing a tax obligation on F&B chains that expand beyond a particular number of avenues within a designated period. “These can all act as a call for F&B operators not to bite off more than they can chew and expand the development of F&B to an extra reasonable and lasting pace,” adds Hsu.
Citing information from the Accounting and Corporate Regulatory Authority (Acra), Knight Frank notices that a total amount of 3,047 F&B businesses shut down in 2024– the top figure since 2005. On the other hand, 3,793 F&B businesses were formed the similar year, the second-highest figure since 3,934 beginnings in 2021.
The rapid entries and exits of F&B brands might point to an indication of overgrowth and the need for intervention to stabilise the market, says Knight Frank. “The dining scene seems reaching oversupplied values, and measures to cool the marketplace for a lasting field may be required earlier rather than later on,” claims Ethan Hsu, head of retail at Knight Frank Singapore.
Offered the consistent high-cost setting and the increasingly competitive F&B scene, the outlook for the retail stays difficult, claims Knight Frank. On top of that, sweeping tariffs revealed by US Head of state Donald Trump can pull down business view. “For a small trading state like Singapore, this may have far-ranging impacts that might weaken [Knight Frank’s] delicate 1% to 3% growth projection of prime retail rents in 2025,” states Hsu.
