Bookmark & Share
Average rents of retail space in Singapore remained unchanged at S$25.39 per sq ft in Q1 2015 following healthy islandwide occupancy of above 90 percent and robust net absorption of 1.67 million sq in 2014, according to a report from DTZ Debenham Tie Leung.
Specifically, rents in other city areas outside Orchard/Scotts Road remained flat at $17.98 per sq ft, while those in the suburban districts were also fixed at $28.05 per sq ft during the first quarter.
However, retail rents at these areas are forecasted to moderate given that 99 percent of the supply for 2015 or some 1.2 million sq ft of net lettable area (NLA) will be concentrated there.
In Orchard/Scotts Road, average rents edged up by 0.3 percent quarter-on-quarter to S$30.13 per sq ft in Q1 2015 as only 8,000 sq ft of NLA are projected to enter the market this year versus the 407,000 sq ft seen in 2014. Additionally, the upcoming supply in this area is forecasted to be limited at 24,000 sq ft over the next five years.
However, DTZ said the city-state’s retail space leasing market is now being squeezed by the growing popularity of e-commerce.
For example, CapitaMall Trust’s latest financial results for 2014 revealed that shopper traffic at all of its properties dipped by 0.9 percent last year compared to 2013, while overall tenants’ sales per sq ft fell 1.9 percent.
“The e-retailers are able to offer goods at prices lower than what the traditional retailers can offer by circumventing the high labour costs, payments to middle-men and rent for retail space. As consumers become comfortable transacting online, more shoppers will be drawn to the virtual shops to make their purchases,” said DTZ Associate Director of Research, Dr Lee Nai Jia.
To remain competitive amidst the flourishing e-commerce scene and Singapore’s tight rules on foreign manpower, DTZ’s Director of Retail Anna Lee said that brick-and-mortar retailers are reinventing their business models to set themselves apart from their rivals.
“These issues have pushed them to come up with creative solutions such as the exploration of shorter term leases and tapping on the advantages of the mobile market to increase their market share. In the longer-term, we expect to see a positive transformation of how retailers conduct their businesses,” she added.
Nikki De Guzman, Editor at CommercialGuru, wrote this story. To contact her about this or other stories email nikki@propertyguru.com.sg.
Related Articles:
Centrepoint to undergo S$50mil facelift