Weak consumer sentiment is to blame.
Retail landlords will have to be more flexible with their tenants after islandwide first-storey rents dropped 5.9% in 2015, on back of weak consumer sentiment and uncertain global economic conditions.
According to DTZ, average islandwide first-storey retail rents fell by 1.2% quarter-on-quarter to about $30.50 per sq ft in the last quarter of 2015, marking the third consecutive decline since Q2.
For the whole of 2015, average first-storey rents fell at a faster pace of 5.9% compared to the slower decline of 0.3% in 2014.
Among the various regions, rents in Orchard/Scotts Road were the most resilient in 2015. Rents in the prime shopping belt dropped by a marginal 1% quarter-on-quarter to $38.05 per square feet in the last three months of the year, supported by the lack of new completions in the next four years.
Meanwhile, average first-storey rents in the suburban areas dropped by 1.2% q-o-q to $30.70 per sq ft. In contrast, average first-storey rents in the other city areas registered a greater decline of 1.4% q-o-q.
“The larger decline in rents in the other city areas was largely due to area’s dependence on the weekday office crowd for sales volume. Although islandwide rental values have softened over the past year, occupancy rates remained healthy from Q1 to Q3 2015 as landlords become more flexible,” said DTZ.
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