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Prime retail rents on Orchard Road continued softened in Q3 2015, falling by 1.0 percent quarter-on-quarter to S$31.6 per sq ft per month, a Savills report revealed.
After a period of stability, the suburban market saw retail rents fall 3.0 percent to S$30.2 per sq ft per month, effectively widening the rental gap with its Orchard counterpart.
Meanwhile, the increase in island-wide vacancy levels moderated to 0.2 percentage points quarter-on-quarter to 7.0 percent in Q3 2015. Savills attributed this in the increase in vacancy levels to a significant improvement in Downtown Core vacancy, which improved to 11.7 percent in Q3 2015 from 13.4 percent in Q2 2015.
Demand for retail space on Orchard Road, on the other hand, remained firm with the vacancy rate unchanged at 7.9 percent.
Looking ahead, Savills expect around 5.1 million sq ft of retail space to enter the market from Q3 2015 to 2019. Of these, 74 percent will be situated in suburban areas.
“As a hedge against recently completed or upcoming malls, landlords of mature suburban developments are embarking on AEI to stay competitive,” it said.
Tiong Bahru Plaza, for instance, has embarked on a S$90.0 million refurbishment to expand its footprint by 25,000 sq ft as well as rejuvenate its tenant-mix for a younger catchment.
IMM is on its second phase of AEI to “convert space into outlet stores, which upon completion at year-end will bring the total to over 80”.
Bukit Panjang Plaza also has AEI works scheduled for Q4 2015 “to give it a fresh façade and free up 18,000 sq ft of commercial GFA,” said Savills.
Nikki De Guzman, Editor at CommercialGuru, edited this story. To contact her about this or other stories email nikki@propertyguru.com.sg
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