In Business Times last week, a report on the retail landscape of Singapore wrote about hot the retail landlords are adapting to the current market lull. Recently the retail landlords are moving from the heyday trends which involved slicing retail spaces into smaller units to lease out at higher rents per square foot, to luring back the bigger tenants they were once inclined to shoo away. The emphasis is about maintaining occupancy and preserving rents, keeping a balance in large and small retail tenant mix.
In the current phase of softening rents and dwindling tenant sales is leading to an anticipated fall in retail rents next year, with retail rental declines in 2016 go as far as 5 per cent. The looming supply of retail space is also a worrying factor, together with issues of manpower crunch, lower tourist arrivals and the strong Singapore dollar as well as competition from e-commerce.
Based on the past three-year average annual net demand for retail space to project the level of space take-up ahead, it will take close to four years to absorb the upcoming new retail space, which is more than 2 million sq ft of gross retail space to be completed next year.
Anchor tenants like as childcare, daycare centres, fitness centres, commercial schools and medical centres provide ready and captive customers during the weekdays to shopping malls.
A large tenant compared to more smaller tenants results in less work for the landlord in terms of lease management. Among them, Raffles Medical opened a multi-disciplinary medical centre at newly renovated Shaw Centre in June and Harvey Norman just expanded its store space at Millenia Walk with the opening of its new 100,000-sq-ft flagship outlet in the mall.
There are also emerging new-to-market concepts, for e.g
- Top Japanese cooking school ABC Cooking Studio at Takashimaya,
- Urban Ski, a new indoor snow sports centre, at Millenia Walk,
- Singapore’s first Apple store at Knightsbridge next year,
- Emporium Shokuhin, Singapore’s first integrated Japanese emporium that took up over 34,000 sq ft of space in Marina Square,
- South Korean Pororo Park, which opened its first and largest South-east Asian character-themed indoor playground spanning 11,000 sq ft at Marina Square’s new retail wing last month.
- A major commercial school taking up some 100,000 sq ft of space at Marina Square.
Retail andlords are now more open to new retail concepts which are either destination-centric or offer unique brand positioning. For e.g. the strategy of attracting activity-driven tenants is paying off for Pontiac Land’s Millenia Walk, like the specialised F&B offerings with the opening of Nihon Street. For the department stores, they will likely continue to consolidate in the near term amid weak retail sales, high business cost and manpower constraints.
Marks & Spencer vacated The Centrepoint, John Little closed its Marina Square and Tiong Bahru stores and Metro closed its outlet at Compass Point in August and will be closing its City Square Mall outlet by the end of this year. Wing Tai, which carries brands such as G2000 and Topshop in Singapore, has said it plans to close some of its retail outlets.
The challenging retail environment is keeping landlords on their toes to refresh their mall offerings. CapitaLand recently converted Tampines Mall’s level 5 open roof to a new education hub with well-known educational centres such as Yamaha Music School, Julia Gabriel Centre, MindChamps and Stalford Learning Centre. It is also redeveloping Funan DigitaLife Mall into an integrated development. For FCT, the proportion of F&B tenants has increased in malls like Causeway Point, Changi City Point.