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Singapore registered a continued decline in average prime retail rents in the second quarter of this year, revealed a CBRE report.
Average prime rents in Orchard Road as tracked by CBRE fell 1.1 percent from Q1 2016 to S$32.50 per sq ft per month or its sixth consecutive quarter of decline.
Over at the suburban areas, rents dipped 0.7 percent to S$29.45 per sq ft per month from Q1 2016.
“Our research shows a clear reduction of rentals, and it would not be accurate to report otherwise, as the retail sector is still undergoing restructuring and is currently an occupiers’ market,” said Desmond Sim, Head of Research, Singapore & South East Asia, CBRE.
“Rents have certainly remained under pressure, but there are still sparks of activity, particularly around well-located and well-managed suburban malls that have a strong positioning tilted towards families and the immediate catchment such as Compass One, which recently reported 90 percent pre-commitment.”
The report noted that while there was an increase in general vacancy with more retail stock expected, the availability of prime space in good locations is limited. This deterred the entry and expansion of some retail brands since visibility, location and high foot fall became even more important factors than ever due to the stiff competition in the market.
“With no foreseeable new supply in Orchard Road and Marina Centre in the next few years at least until 2019, this should provide some support for prime rents in Orchard Road for the next half of the year,” it said.
Sim added that the market was particularly challenged by a mismatch between demand and supply at this point in the cycle.
“While most of the limits to expansion stem from consolidation activity, there are some retailers who are constrained by the shortage of quality space,” he said.
Nikki De Guzman, Editor at CommercialGuru, wrote this story. To contact her about this or other stories email nikki@propertyguru.com.sg
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