Retail vacancy holds at 6.3% as tight supply masks softening leasing demand

Prime malls continue to attract tenants whilst secondary locations struggle.

Singapore's retail vacancy rate held steady at 6.3% in the first quarter of 2026, as a muted supply pipeline offset softer leasing demand and rising tenant churn, according to Savills.

The stability masks a widening divide in the market, with well-positioned malls with strong footfall and transport connectivity continuing to attract healthy leasing interest, whilst secondary locations and smaller retail strips faced growing challenges. Bugis Street, once a major draw for local and tourist shoppers, now has only about 20% of its second-floor shops in operation.

The suburban retail market showed relative resilience, recording net absorption of 140,000 square feet in Q1 2026, supported by limited new supply and stable catchment demand. In the Orchard Area, average monthly rents edged up 0.1% quarter-on-quarter to $23.60 per square foot, whilst suburban rents rose 0.2% to $14.90 per square foot.

Looking ahead, supply is expected to remain tight. Savills projects approximately 427,000 square feet of new retail space to be completed in 2026, slightly below the five-year average of 474,000 square feet, with completions tapering further in 2027 before a fresh supply wave from major redevelopment projects arrives from 2028.

"The retail market is showing signs of bifurcation. Whilst weaker secondary locations continue to face leasing challenges, the limited near-term supply pipeline is helping to keep overall vacancy stable and support occupancy fundamentals for stronger-performing assets," said Alan Cheong, Executive Director of Research and Consultancy at Savills Singapore.

Sulian Tan-Wijaya, Executive Director of Retail and Lifestyle at Savills Singapore, noted that retailers are becoming increasingly selective about where they commit space, with demand concentrated in malls offering stable footfall and a well-curated tenant mix. 

"Consumers today are also placing greater value on retail experiences, prompting landlords to introduce more experiential, lifestyle and F&B concepts to drive visitation and dwell time," she said.

Savills expects rents for both Orchard Road and suburban malls to increase by up to 2% in 2026, supported by the muted supply pipeline.