Demand for retail space picks up in 2Q2021 while vacancy stabilises
By Timothy Tay
/ EdgeProp Singapore |
Some retailers took advantage of lower rents to lock in choice retail spaces in prime locations.
SINGAPORE (EDGEPROP) - The latest price and rental statistics for the retail market in 2Q2021 by the Urban Redevelopment Authority shows the overall price index fell 2.8% q-o-q. But the retail market also recorded some positive results. Islandwide retail vacancy remained stable at 8.5% and quarterly net absorption was up by 150,695 sq ft. (See also: Retailers adapt to survive Covid-19)
According to Tricia Song, head of research, Southeast Asia at CBRE, the pickup in demand for retail space came as some retailers locked in choice locations on the back of a decline in retail rents and a more stable market outlook.
But the return to Phase Two (Heightened Alert) could delay expansion plans for some retailers for 2H2021, says Song.
Central region retail rents declined for the sixth consecutive quarter since the onset of 1Q2020. Last quarter, central region retail rents fell 0.5% q-o-q due to lowered footfall from mandated remote working, a dine-in ban, and reduced occupancy.
Source: URA
Retail vacancy rates in the Orchard Road area reached an all-time high of 11.8%. The Orchard Road retail market has been hard hit by ongoing border restrictions and dine-in restrictions, says Wong Xian Yang, head of research, Singapore at Cushman & Wakefield.
But a bright spot for the Orchard Road submarket has been the continual expansion of prominent international retail brands and F&B chains, says Wong.
Notable expansions and debuts include Chinese bookstore Zall in Wheelock Place, British active wear brand Sweaty Betty debuted in Singapore in ION Orchard, and fashion brands Superdry and Superga expanded their retail presence in Takashimaya Shopping Centre.
Source: URA
Wong expects prime retail rents could slip further in the coming quarters however a relatively tight retail supply will prevent a drastic decline.
“Demand still remains strong for prime retail spaces in top tier malls and these spaces continue to be very highly occupied. Once the current situation passes, things should get better,” says Wong. She adds that large brand operators and retailers would still be looking for prime space in top tier malls to position themselves for the recovery.
Meanwhile, suburban vacancy rates fell for the fourth consecutive quarter to 6.4% in 2Q2021 and is the lowest vacancy rate for this sector in more than five years. The last trough was recorded in 1Q2016 when the vacancy rate also reached 6.4%.
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