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Restaurants such as Venue by Sebastian (pictured) have opened at Downtown Gallery which features other interesting F&B concepts such as a social kitchen where you can book a cooking station to cook meals with your own ingredients. (Photo: SG Asia City)
Singapore’s food and beverage (F&B) sector continued to drive most of the demand for prime retail space in Q1 2017, according to a report from property consultancy CBRE.
“The demand for F&B spaces is on the rise islandwide. More landlords are incorporating such spaces as they generate activity within malls to draw crowds,” said CBRE’s Executive Director for Retail Services Letty Lee.
For instance, she highlighted the opening of Downtown Gallery in the central business district (CBD), which features interesting concepts such as a social kitchen.
In particular, mid-range restaurants are currently performing well in Singapore. New dining concepts that opened or are opening in Q2 2017 include Japan’s Niku Kappo and Omotesando Koffee, as well as Greek deli and café ERGON.
The property consultancy also noted that more F&B operators are shifting away from shopping centres and are exploring alternative locations like office buildings, shophouses and industrial space.
In addition, CBRE’s 10th edition of ‘How Global is the Business of Retail’ revealed that 24 of 46 new entrants into the local retail scene consisted of F&B operators. Coffee shops and restaurants were also the only sectors that expanded across Asia Pacific and Americas as well as Europe, the Middle East and Africa (EMEA).
Gyms and sporting goods retailers are also performing strongly. In 1H 2017, Virgin Active opened another outlet in Raffles Holland V mall, while Fitness First established another branch at Bugis Junction. Australian activewear brand Lorna Jane ventured into Singapore for the first time with the opening of its store in Ann Siang Hill, while PUMA Forever Faster 2 set up another outlet at Bugis+.
However, demand for retail space from fashion brands was soft during the first quarter, with most operators having no expansion plans.
Similarly, there was little movement from luxury retailers. Their recent activity has been confined to Marina Bay sands, which offer bigger floorplates.
Looking ahead, rents of retail space are expected to decline over the next six months, while supply and vacancy are forecasted to increase, as leasing activity continues to be constrained by labour shortage, rising operational costs, and strict rental terms demanded by landlords.
As of 31 March 2017, average rent of prime retail space fell to S$25.3 psf, down 2.7 percent a year ago and representing ninth consecutive quarters of declines.
This article was edited by Denise Djong.
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