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 lowest from the onset of the pandemic.
Nonetheless, the pipeline of business travel and meetings, incentive travel, conventions and exhibitions (BTMICE), boosted trip connection and capability with the upcoming Changi Terminal 5 will even more boost the tourists recovery and, in turn, the retail sector, mentions JLL’s Phua.
For instance, clothing brand name Zara sealed its shop in Marina Square mall, while Times Bookstores shuttered its avenues in Plaza Singapura and Waterway Point. After launching here 2 years earlier on, South Korean convenience store Emart24 shut all three outlets in Singapore in March. Tom & Stefanie, a kids’s clothing store, shut its outlet at West Shopping center after 25 years.
In 1Q2024, retail place leas in the Central Area slipped somewhat by 0.4% q-o-q, prolonging the drop of 0.1% q-o-q the last quarter. However, islandwide prime floor rentals were up by 1% q-o-q, after a 1.2% q-o-q rise the past quarter.
The Outside Central Region (OCR) observed a negative net holding in retail space of pertaining to 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 attributes it to incorporation in chosen business markets and strength to high leas.
URA’s 1Q2024 data revealed costs of retail investments were up 1.8% q-o-q, marking the fourth straight quarterly surge. Phua attributes the raise in asset rates to real estate investors designating more capital to quality retail resources. Investors are attracted to the field due to the favourable supply-demand principles, favorable yield spread over funding prices and scarcity worth of such possessions.
Angelia Phua, JLL Singapore consulting director for research study & consultancy, notes that greater operational prices, eager competition, unpopular retail ideas and changing customer tastes have also brought about some shop closings and a rise in vacancy rates.
Retail leas in the Central Area pushed up 0.2% q-o-q, mostly due to the Orchard region, 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 fell 1.8% q-o-q in 1Q2024.
In the Orchard area, high quality jewelry chain Swarovski started its biggest shop of approximately 2,300 sq ft at Wisma Atria. Homegrown womenswear company Klarra’s opened a 1,500 sq ft main store at ION Orchard. With the boosted retail need, shopping malls such as Paragon and Wisma Atria had attained complete occupancy by the end of 2023, Wong adds in.
Still, underpinned by resilient community intake and consumer traffic above pre-Covid levels, merchants continued to seize top retail spaces in the OCR, says C&W’s Wong. As an example, the Chinese sportswear company Beneunder selected to released at Westgate Shopping mall in Jurong East in 2023. Hong Kong cosmetics group Sa resumed at Jurong Point last quarter and is starting 3 more shops in the OCR in 2Q2024.
The Orchard area found the highest take-up in retail sector during the quarter, with net demand of 43,000 sq ft or 80% of total take-up in the Central Place. Sellers in the Orchard location were propelled to take up even more location as visitors landings in 1Q2024 rose by 49.6% y-o-y, bolstered by a five-fold increase in Chinese guests, claims Song.
“The reseller industry continues to be two-tiered,” says Tricia Song, CBRE head of research study for Singapore and Southeast Asia. Secondary areas continue to see softer demand for retail industry space contrasted to prime space.
