Retail rents continue to stagnate in Q1 2014: DTZ

Retail rents in Singapore continued to stagnate in Q1 2014 as leasing deals took longer to complete due to differing expectations between retailers and landlords, a DTZ research revealed.

According to DTZ, retailers have become more resistant to increases while landlords stayed firm on their asking prices.

However, landlords could become more flexible in their lease arrangements given the large potential supply in the pipeline – an estimated 2.4 million sq ft of net lettable retail space to be completed this year.

Of this, around 56 percent will be located in the suburban areas, 24 percent in other city areas and the remaining 20 percent in Orchard/Scotts Road.

This year's pipeline supply accounts for 45 percent of the 5.4 million sq ft of retail space that is set to be completed over the next five years.

Lee Lay Keng, DTZ's Regional Head (SEA), Research, said: "Due to pockets of space available from the asset enhancement initiatives (AEI) at Suntec City, Marina Square and Chijmes, Parco vacating their space at Millenia Walk and at the new development Capitol Piazza, retail rents in other city areas may decline."

Meanwhile, retail rents in Orchard/Scotts Road are expected to increase as retail space remained limited and continued to be highly sought after by international retailers.

"Together with orchardgateway, which was reported to be 95 percent pre-committed, 268 Orchard Road and the AEIs at Shaw Centre and Claymore Link will add approximately 493,000 sq ft (NLA) of retail space by the end of this year. Following which, there will be no supply in Orchard/Scotts Road until the expected completion of The Biltmore in 2016 which will add only 8,000 sq ft (NLA) of retail space," she added.

While the bulk of this year's pipeline supply is found in the suburban areas, rents are expected to remain firm as most suburban malls enjoy strong demand from retailers looking to expand their presence in the heartlands as well as from the local residential catchment.

Image: Orchard Road



Nikki De Guzman, Junior Journalist at PropertyGuru, wrote this story. To contact her about this and other stories, email nikki@propertyguru.com.sg.



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