Orchard prime retail space sees strong take-up in 1Q2024, with Central Area rents up 0.2% q-o-q
Vacancy rates in the Orchard region were declining to 6.4% in 1Q2024 from 8.7% in 4Q2023, the most affordable from the start of the pandemic.
The Orchard location observed the strongest take-up in retail sector throughout the quarter, with net interest of 43,000 sq ft or 80% of overall take-up in the Central Location. Stores in the Orchard location were spurred to occupy more spot as tourist arrivings in 1Q2024 climbed by 49.6% y-o-y, reinforced by a five-fold boost in Chinese visitors, states Song.
In the Orchard area, great jewelry chain Swarovski opened its largest retail store of about 2,300 sq ft at Wisma Atria. Homegrown womenswear brand Klarra’s opened a 1,500 sq ft main boutique at ION Orchard. With the enhanced retail need, shopping centers which include Paragon and Wisma Atria had attained complete occupancy by the end of 2023, Wong adds.
Retail rents in the Central Area pushed up 0.2% q-o-q, mostly as a result of the Orchard area, explains Wong Xian Yang, Cushman & Wakefield (C&W) head of study for Singapore and Southeast Asia. On the other hand, retail store rentals in the Fringe Areas slipped 1.8% q-o-q in 1Q2024.
However, the pipeline of business travel and meetings, incentive travel, conventions and exhibitions (BTMICE), enhanced flight connectivity and capacity with the upcoming Changi Terminal 5 will even more boost the tourism recovery and, consequently, the retail field, notes JLL’s Phua.
Still, depended by tough local area usage and consumer traffic over pre-Covid levels, stores remained to take prime retail areas in the OCR, states C&W’s Wong. As an example, the Chinese sportswear brand name Beneunder picked to come out at Westgate Shopping mall in Jurong East last year. Hong Kong cosmetics chain Sa resumed at Jurong Point last quarter and is beginning three more shops in the OCR in 2Q2024.
Angelia Phua, JLL Singapore consulting supervisor for research & consultancy, mentions that higher operational costs, keen competition, unpopular retail ideas and evolving customer preferences have actually also resulted in some store closings and a surge in vacancy levels.
In 1Q2024, retail space rentals in the Central Area slipped somewhat by 0.4% q-o-q, prolonging the downturn of 0.1% q-o-q the previous quarter. However, islandwide prime floor rental fees were raise by 1% q-o-q, after a 1.2% q-o-q rise the previous quarter.
For instance, fashion brand Zara shut its outlet in Marina Square shopping center, while Times Bookstores shuttered its shops in Plaza Singapura and Waterway Point. After launching here 2 years beforehand, South Korean convenience store Emart24 shut all three outlets in Singapore in March. Tom & Stefanie, a kids’s clothing merchant, shut its shop at West Mall after 25 years.
URA’s 1Q2024 information showed rates of retail investments were up 1.8% q-o-q, noting the 4th straight quarterly rise. Phua connects the rise in asset rates to investors designating even more capital to top quality retail assets. Entrepreneurs are drawn to the industry because of the good supply-demand principles, favorable return spread over financing costs and shortage value of such properties.
The Outside Central Region (OCR) found an unfavorable net involvement in retail space of about 54,000 sq ft in 1Q2024. Vacancy price in the OCR increased to 4.4% in 1Q2024 from 3.9% in the previous quarter. CBRE attributes it to consolidation in chosen business markets and strength to high leas.
“The retail market remains to be two-tiered,” says Tricia Song, CBRE head of study for Singapore and Southeast Asia. Secondary areas remain to see softer demand for retail industry space contrasted to prime spot.
