Retail rents start to pick up

Retail rents start to pick up
Dec 22, 2009 - PropertyGuru.com.sg

Retail rents in the prime Orchard Road and suburban malls are creeping up in the last quarter, after declining for 4 straight quarters.

A report by DTZ Research showed the gross rents of prime first-storey retail space in Scotts and Orchard roads increased 1 percent to $39.70 psf per month, after it dropped 7.3 percent over the past four quarters.

In the suburban areas, retail rents escalated after it stabilized in the previous months, while rents in other areas such as Great World City and Bugis Junction continue to fall. Quarter-on-quarter prime first-storey retail rents in suburban malls increased 1.5 percent to $33.50 psf per month, after falling 2.1 percent from its peak in the third quarter last year.

Ms. Chua Chor Hoon, DTZ South-east Asia Research head, said the leasing activity has increased, as retailers gain more confidence due to the economic recovery. "There is strong demand for prime first-storey space, evident from the little availability and speed at which they are being taken up, despite the amount of new space that has come up along Orchard Road.”

DTZ estimates that 2.6 million square feet of new retail space, including Mandarin Gallery and 313@Somerset, were added to the supply this year. This is the highest new stock ever seen. Ms. Chua expects that retail rents in Scotts and Orchard Road, and the suburban areas will continue to increase by 2 to 7 percent in 2010.

The new stocks of retail spaces in Orchard Road are expected to reach 165,000 square feet next year, nearly 7 percent of the almost 2.4 million square feet of new retail space expected to be available next year. Most of the new supply outside the city areas will be concentrated in Serangoon Central, Resorts World Sentosa and Nex.