Orchard prime retail space sees strong take-up in 1Q2024, with Central Area rents up 0.2% q-o-q
In the Orchard area, fine jewelry chain Swarovski started its largest shop of about 2,300 sq ft at Wisma Atria. Homegrown womenswear label Klarra’s opened a 1,500 sq ft main boutique at ION Orchard. With the enhanced retail need, shopping malls just like Paragon and Wisma Atria had achieved complete occupancy by the end of 2023, Wong adds in.
However, the pipeline of business travel and meetings, incentive travel, conventions and exhibitions (BTMICE), improved air travel connectivity and capability with the upcoming Changi Terminal 5 will even more increase the travel and leisure recovery and, in turn, the retail sector, mentions JLL’s Phua.
In 1Q2024, retail room rents in the Central Region slipped partially by 0.4% q-o-q, extending the downturn of 0.1% q-o-q the last quarter. Nevertheless, islandwide prime floor rentals were up by 1% q-o-q, after a 1.2% q-o-q increase the last quarter.
URA’s 1Q2024 data showed costs of retail assets were up 1.8% q-o-q, marking the 4th straight quarterly rise. Phua connects the rise in asset rates to investors designating more capital to high quality retail assets. Entrepreneurs are drawn to the market because of the good supply-demand principles, positive yield stretch over financing prices and shortage worth of such assets.
Retail rentals in the Central Area nudged up 0.2% q-o-q, mainly because of the Orchard area, says Wong Xian Yang, Cushman & Wakefield (C&W) head of research for Singapore and Southeast Asia. On the other hand, retail store hires in the Fringe Locations slipped 1.8% q-o-q in 1Q2024.
The Outside Central Region (OCR) found a bad net involvement in retail space of about 54,000 sq ft in 1Q2024. Vacancy price in the OCR raised to 4.4% in 1Q2024 from 3.9% in the previous quarter. CBRE associates it to combination in selected field markets and prevention to high leas.
Still, depended by tough community usage and consumer traffic above pre-Covid values, retailers remained to seize prime retail rooms in the OCR, claims C&W’s Wong. As an example, the Chinese sportswear brand Beneunder selected to debut at Westgate Shopping mall in Jurong East last year. Hong Kong cosmetics group Sa restarted at Jurong Point previous quarter and is opening 3 even more shops in the OCR in 2Q2024.
The Orchard region found the strongest take-up in retail space during the quarter, with final interest of 43,000 sq ft or 80% of total take-up in the Central Area. Sellers in the Orchard area were propelled to use up even more location as visitors landings in 1Q2024 climbed by 49.6% y-o-y, reinforced by a five-fold boost in Chinese guests, says Song.
“The reseller market continues to be two-tiered,” states Tricia Song, CBRE head of study for Singapore and Southeast Asia. Secondary places continue to view softer interest for retail industry place contrasted to prime sector.
For instance, fashion brand name Zara closed its shop in Marina Square shopping mall, while Times Bookstores shuttered its outlets in Plaza Singapura and Waterway Point. After introducing here 2 years beforehand, South Korean convenience store Emart24 closed all 3 shops in Singapore in March. Tom & Stefanie, a little ones’s fashion retailer, closed up its outlet at West Shopping center after 25 years.
Openings prices in the Orchard region were down to 6.4% in 1Q2024 from 8.7% in 4Q2023, the most affordable ever since the beginning of the pandemic.
Angelia Phua, JLL Singapore consulting supervisor for research study & consultancy, notes that higher working costs, keen competition, unpopular retail concepts and switching consumer preferences have also resulted in some store closings and a surge in vacancy rates.