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 Area slipped partially by 0.4% q-o-q, expanding the downturn of 0.1% q-o-q the previous quarter. However, islandwide prime floor rents were jump by 1% q-o-q, after a 1.2% q-o-q increase the last quarter.
In the Orchard area, fine jewellery chain Swarovski opened its biggest retail store of around 2,300 sq ft at Wisma Atria. Homegrown womenswear brand name Klarra’s opened up a 1,500 sq ft main boutique at ION Orchard. With the boosted retail need, malls such as Paragon and Wisma Atria had achieved full occupancy by the end of 2023, Wong includes.
URA’s 1Q2024 data showed prices of retail assets were up 1.8% q-o-q, marking the 4th straight quarterly rise. Phua attributes the increase in asset prices to entrepreneurs allocating more resources to quality retail assets. Clients are drawn to the sector due to the good supply-demand fundamentals, positive yield spread over financing expenses and scarcity worth of such properties.
Still, underpinned by resistant local area consumption and consumer traffic above pre-Covid ranks, stores continued to seize top retail rooms in the OCR, claims C&W’s Wong. For example, the Chinese sportswear brand name Beneunder picked to launch at Westgate Shopping center in Jurong East in 2023. Hong Kong cosmetics chain Sa resumed at Jurong Point previous quarter and is opening three even more shops in the OCR in 2Q2024.
Retail leas in the Central Location pushed up 0.2% q-o-q, mainly because of the Orchard area, explains Wong Xian Yang, Cushman & Wakefield (C&W) head of research study for Singapore and Southeast Asia. On the other hand, retail store rents in the Fringe Areas slipped 1.8% q-o-q in 1Q2024.
Angelia Phua, JLL Singapore consulting executive for research study & consultancy, notes that higher functional costs, intense competition, unpopular retail concepts and shifting consumer preferences have actually in addition resulted in some shop closures and a surge in vacancy rates.
The Orchard location found the strongest take-up in retail place throughout the quarter, with final interest of 43,000 sq ft or 80% of complete take-up in the Central Location. Stores in the Orchard area were propelled to occupy more space as tourist landings in 1Q2024 climbed by 49.6% y-o-y, boosted by a five-fold boost in Chinese visitors, states Song.
For instance, fashion trend brand Zara closed its shop in Marina Square mall, while Times Bookstores shuttered its sites in Plaza Singapura and Waterway Point. After introducing here 2 years beforehand, South Korean convenience store Emart24 shut all three shops in Singapore in March. Tom & Stefanie, a kids’s clothing store, closed its shop at West Shopping center after 25 years.
Nevertheless, the pipeline of business travel and meetings, incentive travel, conventions and exhibitions (BTMICE), boosted trip connection and ability with the upcoming Changi Terminal 5 will even more increase the tourism recovery and, in turn, the retail market, indicates JLL’s Phua.
“The retail industry continues to be two-tiered,” claims Tricia Song, CBRE head of study for Singapore and Southeast Asia. Additional places remain to see softer demand for retail industry place compared to prime spot.
Vacancy rates in the Orchard region were lower to 6.4% in 1Q2024 from 8.7% in 4Q2023, the lowest since the start of the pandemic.
The Outside Central Region (OCR) saw a negative net absorption in retail area of regarding 54,000 sq ft in 1Q2024. Vacancy rate in the OCR increased to 4.4% in 1Q2024 from 3.9% in the previous quarter. CBRE associates it to consolidation in chosen field markets and prevention to high leas.
