Prime retail rent fall in the City but remained stable in City Fringe and Suburban areas
Prime retail rents islandwide decreased by 2.3% y-o-y to $31.20 per sf per month but remained unchanged from the preceding quarter based on the latest research report by Knight Frank Research released on the 1 July 2016. While retail rents in Orchard Road remained stable in Q2 2016, the same cannot be same for the Marina Centre, City Hall and Bugis areas which showed a decrease for the third consecutive quarter to $31.40 per sf per month. The rents in City Fringe and Suburban held strong with prime rents growing modestly between 0.1%-0.3% q-o-q in Q2 2016.
With an estimated 4.0 million square feet of net retail space completing between 2016-2020 (average of 800,000 square feet of retail space per year) and with major retailers consolidating their operations amidst global uncertainty (compounded by Britain’s vote for ‘BREXIT’ on the 23 June 2016) and the expected softening of the economy for the next 18-24 months, retailers have to innovate and find creative ways to differentiate themselves from their competitors.
While confidence in general may be wavering, things aren’t all that bad at the moment. Last week, all the retail space on the upcoming Centrium Square; a freehold mixed-use development on the current Serangoon Plaza site in Little India was sold to Singapore-incorporated vehicle of Mohammmed Saiful Alam for S$135 million, according to Business Times. This is not the first en-bloc acquisition made by the group, having purchased the Grand Chancellor on Belilios Road, also along Little India in 2014. With the group purchasing all 49 retail units (27,179 sf) in Centrium Square, it will give the group an opportunity to develop a strong concept and have full control on the tenant mix for the retail complex. The average price of $4,967 psf for the retail units reflected the confidence the purchaser has on the retail trade in that precinct and the economy as a whole, albeit in the medium to long term.
Retail landlords are rolling out refreshing and innovative concepts in the bid to attract more visitors to their retail malls.
A new Japan Food Town was unveiled to the public on the level 4 of Wisma Atria on 16 July 2016. A joint venture between Cool Japan Fund; a public-private fund in collaboration with Japan Association of Overseas Promotion for Food & Restaurants (JAOF) and its corporate supporters, the S$8.5 million investment which covers 20,075 square feet of food hall will have 16 casual dining outlets offering a broad range of quality and authentic Japanese cuisine at affordable prices. Not only with the concept be unique and the first of its kind at this scale, the ingredients such as Matsusaka Beef, Kinme Mai, and Kindai Maguro that will go into the food will also be specially air-flown straight from Japan.
OUE Downtown Gallery has reportedly had pre-commitments of more than 60% of their 145,000 square foot of space in the upcoming retail at OUE Downtown. The retail mall will be focusing on lifestyle, wellness and technology with innovative concepts such as having a 4,000 square feet social kitchen on level three. Fitted with 10 cooking stations complete with kitchen equipment, crockery and condiments, patrons can book slots to cook for their friends and guests for social gatherings. ‘This will take social gatherings of friends to the next level’, according to Ms Patrina Tan, Vice-President for retail, marketing and leasing at OUE,
The landlord will be creating an auto deli – a dedicated area where freshly prepared food, prepared in central kitchen can be picked up these lockers at a specified time. A casual dining area will be provided for in these areas so that diners can have their meals there. The orders will be done via a mobile app that will be rolled out early next year.
It remains to be seen if these novelties are sustainable in the months/years to come. One thing is for sure – constant change is required to ensure a thriving retail scene. Moving forward, the smaller suburban malls without a critical number of retailers/refreshing concept and individually strata-owned retail units will eventually shut down or be taken over collectively by larger and more capitalized groups with the aim to turn them into profitable models.
Retail landlords dressing up their malls with innovative concepts to increase footfall | HOME