ST : Retail rents creeping up

Dec 21, 2009
Retail rents creeping up
By Esther Teo



Retail space in the prime Orchard retail belt and suburban malls have crept up in the last quarter, buoyed by the upswing in the economy, after four consecutive quarters of decline. -- ST PHOTO: ALPHONSUS CHERN

RETAIL space in the prime Orchard retail belt and suburban malls have crept up in the last quarter, buoyed by the upswing in the economy, after four consecutive quarters of decline.

In its report released on Monday, DTZ Research said that gross rents of prime first-storey retail space in Orchard and Scotts roads rose slightly by 1 per cent to $39.70 per sq feet per month, after falling 7.3 per cent in the previous four quarters.

In the suburban areas, retail rents moved up after having stablilised in the previous quarter, while rents in the other city areas like Bugis Junction and Great World City continued to fall. Prime first-storey retail gross rents in suburban malls rose 1.5 per cent quarter-on-quarter to $33.50 per square ft per month, after having fallen 2.1 per cent from the peak of the third quarter last year.

DTZ South-east Asia Research head Ms Chua Chor Hoon said that leasing activity has increased as retailers gain more confidence, along with 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," she said.

DTZ estimates that 2.6 million square feet of new retail space, which included 313@Somerset and Mandarin Gallery, were added to the stock this year. This is the highest new supply ever seen. Ms Chua expects prime retail rents in Orchard and Scotts Road and the suburban areas to continue to move up by 2 to 7 per cent next year.

The new supply in Orchard Road is expected to fall to about 165,000 sq ft next year and will be a mere 7 per cent of the almost 2.4 million sq feet of new retail space projected to be available next year. Outside of the city areas, most of the new supply will be concentrated in Resorts World Sentosa, Nex and Serangoon Central.