Tag Archives: Commercial

Artistes started new cafe in Chinatown

Mama shop

Felicia Chin and Sora Ma are now officially cafe owners, in addition to their day jobs as MediaCorp artistes.

They have joined forces to set up The Mama Shop, a retro-themed space in the former Police Operational Headquarters at 195 Pearl’s Hill Terrace. The cafe serves up burgers, waffles and old-school drinks like iced kopi and sparkling limau.

The Mama Shop’s opening ceremony was held on Monday night, complete with a festive lion dance and celebrity guests including Pierre Png, Jesseca Liu, Dennis Chew, Michelle Chong, Pornsak, and Zheng Geping and family.

“It’s a small start but I think it’s a place for friends and to meet new people,” Chin said. “It’s called Mama Shop because there’s a personal touch to it — it’s not pretentious. I chanced upon this location and I thought it’s away from everybody else. It’s like a personal kind of private area for your friends and it’s quite quiet; it’s not amongst the crowds. Sometimes, good things have to be looked for.”

The business has been a personal effort for both Chin and Ma, both 30. “When it comes to acting, you only need to make sure your scenes are done well,” said Ma. “But when it comes to business, there are a lot of things you have to know. Felicia and I are in charge of marketing and PR but we have to know, for example, where the food comes from and how to pair it. Everything on the menu, we’ve experimented with more than ten times.”

She added: “It feels like I’ve been promoted!”

http://www.todayonline.com/entertainment/celebrity/felicia-chin-and-sora-ma-open-cafe

Da Vinci Building sold for $58M

SIM Lian Holdings Pte Ltd has bought the Da Vinci building at 191 Upper Bukit Timah Road for S$58 million.

The seller, a unit of high-end furniture retailer Da Vinci Holdings Pte Ltd, will be vacating the property, which it has been using as its showroom.

When contacted by The Business Times, Ken Kuik, managing director of Sim Lian Holdings, said: “For now, this will be an investment property. We’re going to lease out the building after the seller moves out.”

Sim Lian Holdings, a privately owned vehicle of the Kuik family, holds a majority stake in mainboard-listed Sim Lian Group.

The sale of Da Vinci building was brokered by ERA Legends Division, a member of Prime Group.

The Da Vinci building is right next to Sim Lian Holdings’ headquarters building. Both properties are on freehold sites and have fully tapped the 1.4 plot ratio allowed for the sites, which are zoned for commercial use under Urban Redevelopment Authority’s Master Plan 2014.

“In the long term we could amalgamate the two sites and redevelop the combined land,” reckons Mr Kuik.

Da Vinci building has a land area of 21,415 sq ft and gross floor area (GFA) of nearly 30,000 sq ft.

The building has four storeys, an attic and a basement (housing 12 car park lots)

Sim Lian’s HQ building next door has GFA of about 52,000 sq ft. The company and its listed vehicle occupy the upper levels of the four-storey building. The ground floor is leased to furniture, electronics and IT retailer Courts.

Da Vinci is understood to have signed a lease for about 9,000 sq ft of retail space at Thong Sia Building at Bideford Road, off Orchard Road.

– See more at: http://business.asiaone.com/news/da-vinci-building-upper-bukit-timah-sold-s58m#sthash.H5rMFWPu.dpuf

Q3 rents for business parks lifted by steady demand

Business parks remain a bright spot amid the gloom surrounding industrial property, with rents moving up in the third quarter, said consultants DTZ.

It noted that average monthly rent was $5 per square foot (psf) in the three months to Sept 30 – up 2 per cent on the second quarter, a rate of growth that has been maintained all year.

The demand for business parks was due in part to “the spillover from higher office rents”, DTZ reported yesterday.

“There are more cases of qualifying office occupiers who are drawn by the lower business park rents relative to office rents,” said Ms Cheng Siow Ying, DTZ’s executive director of business space. She noted that the difference in rent can be as high as 30 per cent.

Ms Cheng cited Galaxis, a business space in one-north slated to be completed by the end of the year. It has already garnered a pre-commitment rate of more than 40 per cent, with signed leases from firms such as Canon, Oracle and Electrolux. “The movement of qualifying office occupiers to business parks is expected to continue as average office rents continue to rise,” she added.

While business parks are enjoying better times, average monthly rent for some conventional industrial space has stayed flat. First-storey rents came in at $2.20 psf from the second quarter while those for upper floors stayed at $1.80 psf.

There were 203 sales of strata-titled industrial property in the third quarter, down about 36 per cent from the second quarter. There have been 842 transactions so far this year, significantly lower than the 1,986 in the same period last year.

A report from CBRE, also out yesterday, found that the rent gap between business parks in the city fringe and those in the rest of the island widened to 33 per cent in the third quarter, up from 29 per cent in the second quarter.

“Occupiers are more keen on higher specifications and quality developments which (business parks in the) city fringe have been able to provide,” said Mr Michael Tay, executive director of office services at CBRE.

“Location and connectivity are also important considerations which prompt occupiers to pay the premiums in rent.” He added that the difference in rent for business parks in the city fringe and those in the rest of the island is expected to “stabilise”. “Rent in new developments will edge up but this increase is likely to be restrained by older assets that offer more competitive rents.”

– See more at: http://business.asiaone.com/news/steady-demand-lifts-q3-rents-business-parks#sthash.H3yW1UOD.dpuf

Samsung Hub’s office sold at $3175psf

AT LEAST two sizeable strata office deals have been done lately in the Raffles Place area: Level 19 of Samsung Hub, and half of the 11th floor at Prudential Tower.

The 19th floor of Samsung Hub along Church Street has been sold for nearly S$41.7 million or S$3,175 per square foot (psf) based on the strata area of 13,121 sq ft. The buyer is said to be a foreign party purchasing the space purely as an investment. Market watchers say that might have resulted in the psf price being lower than the S$3,225 psf fetched for the whole of the 18th floor spanning 13,132 sq ft, sold last month.

In that transaction, which amounted to S$42.35 million, the buyer is believed to an Asia-based group involved in the oil and gas business among others, looking to occupy the space; existing leases on the floor run out in phases starting later this year. An owner occupier may be more motivated to pay a higher price than an investor. The lease on the entire 19th floor was recently renewed until 2017. The net yield to the buyer is believed to be sub-3 per cent.

The 18th and 19th floors each comprise six strata units.

The seller of both 18th and 19th floors is Church Street Holdings – a partnership between Buxani Group and a group of offshore investors advised by Mukesh Valabhji of Seychelles-based Capital Management Group.

With the latest sale, Church Street Holdings has sold five of the six floors in the 999-year leasehold building that it acquired from OCBC in 2007 for S$1,560 psf or S$122.4 million. The six floors were Levels 16-21. The company is now left with Level 21, for which it is said to have received unsolicited offers.

Savills is said to have brokered the sale of the 19th floor.

Over at Prudential Tower, which is on a site with about 80 years’ balance lease, half of the 11th floor space, under a single strata unit of 5,952 sq ft, has been sold for S$2,750 psf or S$16.368 million. CBRE brokered the sale, which was made to a Chinese construction group that currently occupies rental premises elsewhere in Singapore and plans to eventually occupy the Prudential Tower space it is purchasing. The space is currently leased to two tenants; the leases are said to expire next year.

The unit is being sold by a consortium that earlier this year bought Keppel Reit’s 92.8 per cent stake in the building for S$512 million or nearly S$2,316 psf on net lettable area.

Comprising KOP Limited, Lian Beng Group, KSH Holdings and Centurion Global, the consortium is said to be preparing to launch an expression of interest exercise for the other half of the 11th floor of Prudential Tower, spanning 5,102 sq ft under a single strata unit. CBRE will be marketing the unit in Singapore, while Savills will do the overseas marketing. The pricing expectation is expected to be in excess of S$2,750 psf.

Also available for sale is a half-floor unit, also 5,102 sq ft, on Prudential Tower’s 16th floor owned by the consortium. Galven Tan, director (investment properties) at CBRE, noted that the strata office market is still seeing keen buying interest from potential owner occupiers.

Market watchers, note, however, that since the total debt servicing ratio framework was introduced in June last year, strata office investors have found it harder to get loan approval compared with those buying the space for their own use.

http://www.businesstimes.com.sg/real-estate/samsung-hubs-19th-floor-sold-at-s3175-psf

Havelock Commercial premises sold 70% launched

Some 70 per cent of the 50 units at Havelock II that Guthrie GTS has sold since the project was soft launched in mid-July were picked up by buyers for their own use.

This is a significantly higher proportion compared with a share of 30-45 per cent for owner occupiers among buyers of strata commercial units in Guthrie’s ventures in recent years, such as Paya Lebar Square, The Adelphi near City Hall MRT Station and Burlington Square along Bencoolen Street.

In an interview with BT, Guthrie GTS director Michael Leong described the higher proportion of end users in Havelock II as a “healthy trend” reflecting the drop in speculative fervour.

The 50 units Guthrie has sold in Havelock II make up half of the 100 office and retail units released in the project, which will be the revamped 2HR building the group acquired in March 2013. In all, the project will have 245 units comprising 151 retail units and 94 office units.

Mr Leong acknowledged that the TDSR (total debt servicing ratio framework) has slowed sales; that said, he noted that “buyers now have a better grasp of this policy, enabling them to evaluate faster and accelerate purchasing decisions”.

To date, the group has sold 30 of the 50 retail units released and 20 of the 50 office units released. Office units sold have sizes ranging from 312 sq ft to 2,357 sq ft and have achieved an average price of S$2,228 psf, while retail units taken up are sized 150-1,335 sq ft and have fetched an average of S$4,657 psf.

“Although the building is in a slightly fringe part of the CBD, it is attractively located between two MRT stations – Clarke Quay and Chinatown stations,” said Mr Leong.

The project stands on a site with a balance lease term of about 68 years. Guthrie paid S$282.88 million for the eight-storey building last year and will invest a further S$40 million revamping it. However, the site’s lease will not be topped up.

Most of the building’s tenants have already moved out with the last remaining occupiers slated to exit by end-January 2015. Renovations began a month ago and are slated for completion by H1 2016.

Among other things, a new facade will adorn the building. Its carpark entrance/exit will be relocated, and two levels in the building will be converted to retail use.

As a result, the revamped building will have four floors of retail space (Basement 1 to Level 3). Above that will be five levels of offices. About 100 car park lots will be housed in Basement 2.

The existing office-retail mix of 80:20 will be changed to 45:55. Havelock II will have 82,408 sq ft of retail space and 64,583 sq ft of offices.

Guthrie has also strategically decided to price 70 per cent of the project’s total 245 units within a sweet spot of up to S$2 million each because that is the marketable and affordable range, said Mr Leong.

Close to half the 245 units cost up to S$1.5 million each. Sizes of retail units in the project range from 140 sq ft (for an F&B kiosk) to 7,395 sq ft (for the food court unit). There is also a 6,620 sq ft supermarket unit.

All retail units will be provided with water points and discharge outlets. Selected units will be provided with independent air-conditioning systems, which will allow occupiers greater flexibility in their operating hours.

All the office units too will be provided with water points and discharge outlets in addition to independent own air-con systems. Selected office units will have ensuite toilets.

Guthrie has appointed CBRE to market Havelock II’s office units, and SLP International, the retail units.

http://www.btinvest.com.sg/property/local/guthrie-sells-half-100-units-released-havelock-ii-20140930/Guthrie Havelock

Singapore’s retail rents inch up in Q2; Office rents in Singapore continue to rise: URA

http://www.businesstimes.com.sg/breaking-news/singapore/singapores-retail-rents-inch-q2-ura-20140725

RETAIL rents in Singapore rose 0.6 per cent in the second quarter, against a decline of 0.3 per cent in Q1, the latest property indices released by Urban Redevelopment Authority on Friday morning showed.

Prices of retail space dipped 0.3 per cent quarter-on-quarter in Q2 2014, after remaining unchanged in the first three months of this year.

The islandwide retail vacancy rate stood at 5.9 per cent at the end of Q2 2014, slightly higher than the 5.8 per cent at the end of Q1.

By the end of Q2 2014, there was total supply of 879,000 sq m gross floor area of retail space from projects in the pipeline.

http://www.businesstimes.com.sg/breaking-news/singapore/office-rents-singapore-continue-rise-q2-ura-20140725

OFFICE rents in Singapore continued to rise, climbing 2.8 per cent in the second quarter following the 2.4 per cent increase in the first quarter of this year.

According to data released by the Urban Redevelopment Authority (URA) on Friday morning, prices of office space remained unchanged in the second quarter compared to the preceding quarter, which saw a 0.5 per cent rise.

The island-wide vacancy rate of office space at the end of Q2 fell to 9.6 per cent, from 10.0 per cent at the end of Q1 2014.

The amount of occupied office space rose 22,000 sq m (nett) in Q2 2014, compared to the 6,000 sq m (nett) rise in Q1.

Shophouse in Telok Ayer put up for sale — Euro Group’s asking price for 999-year leasehold property is S$20-22m

EURO Group, which is involved in a range of businesses including real estate, has appointed Cushman & Wakefield to find a buyer for a three-storey shophouse located a stone’s throw from Telok Ayer MRT Station.

BT Telok Ayer Shophouse for sale

The indicative asking price for No 25 Boon Tat Street, a 999-year leasehold property, is S$20-22 million.

Euro Assets Holdings (S), the owner, is selling the property with vacant possession. Located in the Chinatown-Telok Ayer Conservation Area, the shophouse is currently being spruced up.

Approval has been obtained from the authorities to use the first and second storeys and roof terrace as restaurant space, while the third storey is approved for office use.

Renovation works are expected to be completed in September this year. Sitting on 1,774 sq ft land area, the property has gross floor area of about 4,555 sq ft; in addition, there is 974 sq ft of uncovered space on the roof terrace. It has an internal lift.

The Chinatown-Telok Ayer Conservation Area is a key landmark for tourists due to its historical significance with the Chinese immigrant community in early Singapore. In addition, the area exudes a nostalgic charm both architecturally and historically, says Shaun Poh, executive director of capital markets at Cushman.

“Commercial shophouses, especially those with approved restaurant use, remain an attractive option for buyers in view of the increasing demand for F&B spaces and the limited supply. With its excellent location and palatable price quantum, the subject property is perfect for buyers who wish to invest in a commercial asset in the CBD or an end-user looking to run a restaurant business,” said Mr Poh.

Euro Group is involved in events/conferences, executive search and recruitment, advisory investment strategies, property and F&B businesses. It is also involved in commodity trading and resources related corporate transactions.

It has offices in Beijing, Hong Kong and Singapore.
http://www.businesstimes.com.sg/premium/singapore/shophouse-telok-ayer-put-sale-20140722

BT: Inspiration behind MBFC

Picture

THE recently released Urban Redevelopment Authority (URA) Master Plan 2013 highlights Marina Bay as the new financial and residential district in the urban city centre.

Currently, the Marina Bay Financial Centre (MBFC), which saw its second phase completed earlier this year, is the only development on the new Marina Bay site. Consisting of five buildings – two residential and three commercial, MBFC was designed as a landmark development, artistically merging the older part of the business district with future developments by Marina Bay.

Developed as a joint venture (JV) by Cheung Kong (Holdings), Hongkong Land and Keppel Land, MBFC was envisioned by the developers to provide a dynamic urban environment that would create a strong profile on the Singapore skyline.

To achieve this vision, international architectural firm Kohn Pedersen Fox Associates (KPF), the lead designers behind MBFC, incorporated the idea of a crystalline language using sloping surfaces and slanted tops to give a sense of layering and depth.

KPF architects Robert Whitlock and Bruce Fisher explained that while the design team started out with a more dramatic concept for the buildings, the concepts had to be reconciled with both the height limits of the area and the fundamentally commercial nature of the development.

“The tops of the buildings in the original design were conceived with steep angles and poetic expressions,” explained Mr Whitlock, design principal at KPF, during an interview with BT at the firm’s New York head office.

“From an architectural point of view, there was a lot of pressure to balance the architectural expression, in terms of an iconic set of buildings, with numerous client requirements, particularly efficiencies, that tempered building forms,” said Bruce Fisher, director, KPF.

Owing to the massive scale of the MBFC projects, which spans a four hectare site – synonymous in scale to London’s Canary Wharf, the KPF team worked closely with two local architectural firms – DCA for Phase 1 and A61 for Phase 2 – to ensure the project kept to its tight deadline and met all the requirements.

“Our role for the project was to advise on local authority guidelines and how to achieve the design intent while complying with the stringent requirements. We were more involved in the layout of the residential units based on the developer’s complex unit mix, working closely with KPF to fit the units within the building form and external envelope,” explained Khoo Poh Bin, director, DCA.

The A61 team, on the other hand, worked more closely on the commercial towers given their past expertise on such projects, including working on One Raffles Quay with KPF.

Although the tasks were distributed, the team essentially worked as one to ensure coherence and continuity in fulfilling the developers’ vision. As Mr Khoo noted: “The 12-hour time difference meant work continued without interruption 24/7. We would finish our part in Singapore and update KPF in New York for them to carry on and vice versa, which proved to be an ideal arrangement for the developer.”

According to Mr Whitlock, the developers had very exacting guidelines on how they envisioned the buildings to look and perform with full glass façades and no curved elements in the form.

“The JV’s brief was based entirely on the perceived needs of the financial services community, with a requirement for very efficient floor plates and unlimited views. The horizontal sunshades gave us a way to provide some variation and environmental performance to the facades while delivering floor to ceiling glass, edge to edge,” said Mr Whitlock.

Furthermore, given that MBFC was primarily a commercial venture, there was no need for it to be as dramatically configured, per se, added Mr Fisher.

The workhorse

“The MBFC is really the incredible work horse of Singapore and perhaps, because of that, a little less expressive than say the casino or the Esplanade,” Mr Fisher said.

The URA, too, had a list of requirements. For one, they required that the buildings’ glass exterior meet a minimum glazing level and not have a green tint.

“One Raffles Quay and the NTUC building, which create a sort of gateway to Marina Bay, were clad in green glass and the URA requested a different expression for the MBFC project so that there would be more visual diversity to the area,” commented Mr Whitlock.

Additionally, URA’s guidelines stipulated that there be a street wall, at least 19 metres in height, surrounding most of the site, to create continuity between adjacent development sites. “At heart, this is an urban planning gesture that helps to provide a sense of defined space,” explained Mr Fisher.

However, based on the design of the site, the architects felt that a solid wall would not fill the space adequately, and hence offered alternative solutions.

The design team proposed that the site have 19-metre canopies, instead of a wall, to allow for an open, less restrictive, appearance. “With the canopies, we ended up with a structure that defines the street edge but is very porous,” said Mr Fisher.

“The wall requirement was not working for the architecture, so we had to present alternatives. The URA gave us guidelines, but as with most zoning guidelines, the authorities cannot always predict exactly how guidelines will translate into the final build-out,” he continued. “It is really up to the architects to take this abstract concept and challenge it, to achieve the best results for all parties.”

In consideration of the different requirements – both from the developers and the URA, the architects eventually altered the designs to showcase a lesser degree of dramatic expression to allow for more efficient and dense buildings that complemented the surrounding architecture.

In addition, as Mr Whitlock explained: “The MBFC buildings needed to be more than what you see in the old city where you have a lot of distinct buildings coming together to represent an urban identity, just by virtue of proximity and density.”

“We were trying to find a common architectural language that is appropriate for both commercial and residential uses to allow the architecture of each building to be a little bit subordinate to the collective identity.”

Although the architects faced challenges in trying to deliver a design that met demands of both the developers and the URA, the MBFC site was an area they were extremely familiar with.

Back in 2001, KPF was independently commissioned by Mapletree Investments to conduct studies on the type of programmes and density that should be put on the Marina Bay site.

This was because the master plan that had been in place for a decade needed revision, based on a new understanding within the URA on how the landfill site might be developed to meet today’s needs.

“We did a study for them to look at the application of a mixed-use model that would bring multiple uses to the site and make the most of its adjacency to both Marina Bay and the traditional banking centre,” explained Mr Whitlock.

According to KPF, Mapletree used the study to carry out their own research internally before releasing tender conditions to bidders in 2003, for the Marina Bay white site.

The development guidelines eventually released to interested bidders took KPF’s preliminary studies to an entirely new level.

“There is a huge leap from deciding that you want to develop a site to establishing a framework that will set up the proper moves for later development,” said Mr Whitlock.

Balancing all needs

While KPF’s underlying concepts of connectivity to the traditional city centre, provision of public open space and introduction of the mixed use model were implemented in Mapletree’s revised plans, the main difference was the requirement for a higher density area and for the site to be fully integrated with all of the city’s other systems and infrastructure.

With the new guidelines they received, KPF spent a great deal of time contemplating the layout of the buildings to allow for architectural expression, without compromising on the practical and utilitarian needs of the site. “A traditional master plan development might have placed the buildings as squares on a chessboard where everything lines up. We chose however to subtly rotate the towers to maximize views in all the buildings and relieve the feeling of density on the site,” Mr Whitlock said.

However, despite the stringent guidelines and myriad requirements, the architects felt that such a process enables better architecture.

As Mr Whitlock noted: “When you work on a project like this, you start to have a different understanding of architecture. Typically, an architect is trying to design a building that is built on a site. They want it to be beautiful and expressive of both the owner’s and architect’s aspirations. With any luck, it tries to find some clues with the local context so it does not feel like it has been dropped from a spaceship.

“But when you have to design a whole city within a city in a way where it has some richness, some subtlety, and an endless play between the built environment and public spaces, all of which must relate to the rest of the city – it takes things to an entirely different level.”

Retail rents to hold up

According to yesterday’s Business Times, Retail rents may either hold or inch up over the next few years despite new supply coming onstream. This is supported by a healthy demand for retail space and the fact that rents tend to be “sticky” in nature, property analysts say.

This projection provides cold comfort to retailers looking for a breather from rising business costs. It also goes against the government’s hopes of easing rents with its estimated 600,000 gross square metres of retail space supply from 2014 to 2016.

JLL head of research for Singapore and South-east Asia Chua Yang Liang believes that retail rents will remain stable in the next three years, supported by healthy pre-commitment levels in recently completed malls and for the uncompleted pipeline.

For instance, Orchard Gateway recently opened with nearly full occupancy while the soon-to-be completed refurbishment of Shaw Centre has secured 90 per cent commitment.

“Vacated spaces have been quickly taken up as evidenced by Metro’s takeover of Robinson’s former 130,000 sq ft premises at Centrepoint, which is poised to be completed by the fourth quarter,” Dr Chua said.

In the suburban areas, retail rents are also expected to hold up, even though a good 65 per cent of the estimated 4.1 million sq ft of new net lettable retail area to be rolled out by 2016 will be located in these regions, while only 7 per cent of the supply will be in the Orchard/Scotts area, said DTZ’s regional head (SEA) of research, Lee Lay Keng.

“Upcoming malls such as The Seletar Mall and One KM have reported healthy pre-commitments while there are still retailers looking at expanding in the suburban malls to tap the population living in nearby housing estates,” she said.

Analysts expect prime retail rents in the Orchard/ Scotts Road area to rise in the next three years given limited new supply there. Maybank analyst Ong Kian Lin estimates that Orchard Road prime retail rents will grow 2.5 per cent from 2014 to 2017 on a compound annual growth rate basis.

Suburban malls enjoy higher footfall than some prime luxury malls on Orchard Road, possibly because residents frequent the former more for necessity shopping, he observed. But the conversion rate of footfall to sales is higher at Orchard Road malls, which are more patronised by tourists.

The gap between Orchard Road and suburban mall rents has also narrowed over the years, said Savills Singapore research head Alan Cheong. Monthly rents (without the percentage gross turnover portion) for prime retail space in Orchard Road and suburban malls averaged $34.60 and $31.10 psf respectively in the first quarter.

Mr Cheong noted that grouses by retailers over high rents stem from a disconnect between declining sales and a stubbornly high rental base. Retail rents here typically consist of a base rent and a percentage of gross turnover, so a decline in sales of a tenant should translate to lower rent paid to the landlord. Yet, rents have not budged for some retailers.

Douglas Benjamin, chief operating officer of FJ Benjamin Holdings, an international luxury and lifestyle brand retailer, said: “It’s fair if you are in a mall where business is good and the landlord wants to increase your rent. But if your sales have fallen, maybe because another mall has opened next door, it doesn’t make sense for your landlord to want to raise rents.”

But a study by the Ministry of Trade and Industry (MTI) showed that for most of the renewals in 2012 and 2013, the effective increase in rent per annum was in line with inflation over the period of their lease. Growth in retail rents in the core downtown and city fringe areas was also flat in Q1 compared to a year ago, according to the URA rental index.

But rentals for prime spaces islandwide tracked by Knight Frank, which looked at more comparable units of 350-1,500 sq ft with the best frontage, connectivity, footfall and accessibility, were relatively resilient. Rents for such spaces rose 1.9 per cent in the first quarter from a year ago, driven by higher rents for such spaces in Marina, City Hall and Bugis.

Apart from rents, retail businesses are contending with higher labour costs, tighter foreign workerpolicies and a strong Singapore dollar. The growth of e-commerce is also eating into the sales pie of brick-and- mortar retailers, consultants say.

“We believe that over time, online shopping will be a game changer and unless one is talking about the very high-end products or those where personal service is still deemed irreplaceable, the rest of the retail industry will undergo major structural changes,” Mr Cheong said.

“Only food and beverage may for now survive but there is a limit to how much space a landlord can convert to F&B use,” he added. “Therefore, we believe that it could be online shopping, working through the demand side, rather than increased supply that will ultimately bring down rents.”

Ms Lee of DTZ, however, downplayed the impact from e-commerce. “There will still be consumers who seek the wholesome retail experience of seeing, touching and trying on their goods before they buy,” she said. More online retailers such as blog shops are also setting up physical shops, she added.

http://www.businesstimes.com.sg/premium/top-stories/retail-rents-hold-despite-supply-20140707

In a separate report, Rents have been a sticky issue for retailers, even though consecutive data released lately shows that retail rents have eased and will be capped by the upcoming supply in retail space.

Retailers decry that rents have not factored in their declining sales. This runs contrary to the fact that most lease agreements have a variable rent component based on gross turnover (GTO).

Most landlords here, except for strata-titled owners, charge their tenants a base rent and a percentage of GTO. The rent structures vary across tenants and locations. Some tenants pay both a base rent and a turnover rent of 0.5-2 per cent; others pay by either that formula or purely turnover rent of 10-20 per cent – whichever is higher. There are other permutations in the rent calculations.

Whatever the case, having a turnover rent as part of the total rent computation should have made overall rents more susceptible to the revenues of retailers.

http://www.businesstimes.com.sg/premium/top-stories/why-retail-rents-are-still-sticking-point-20140707