Gap, Banana Republic, and American Eagle Outfitters recently shut down their stores in Central, whilst Chanel, MiuMiu and Fendi put up their pop up stores earlier this year.
Singapore’s fringe or suburban malls outperformed their Orchard Road counterparts in the first quarter of 2018, Savills Singapore has observed.
According to a report, a slight increase in the island-wide retail vacancy rate (7.5%) was caused by the addition of 118,000 sqft of net new stock as the occupied retail space remained unchanged in the quarter. “Although retail vacancies in some areas increased marginally, spaces in prime locations (stressed) within well-managed malls are still in high demand, leading to mild rental increases,” it said.
The retail rental index for Fringe Area went up by 0.3 ppt QoQ, whilst Central Area (including Orchard Road) rose only 0.2 ppt. However, after three consecutive years of quarterly decline, the rental index for Central Region inched up 0.1 ppt.
“Nonetheless, some landlords may be flexible on rents in order to maintain their targeted tenant mix. As such, Savills prime monthly rents in Orchard Road stayed flat at $29.90 psf,” Savills Singapore said. Rents for suburban areas remained at $28.80 psf.
Savills Singapore research senior director Alan Cheong noted that in the Central area, less resilient retail brands have been forced to exit the market as competition with e-commerce and fast fashion labels such as Zara and H&M persisted.
Gap shut all of its stores at Suntec City and VivoCity whilst Banana Republic closed outlets at Paragon and MBS in February, Savills Singapore reported. In the same month, American Eagle Outfitters also left the market after it closed its Suntec City outlet and VivoCity flagship store.
In March, Cortina Holdings vacated all of its Orchard Road-facing watch boutiques on the first and second level of Wisma Atria, leaving 4,700 sqft of space unoccupied. The retail chain retained only its Raymond Weil Boutique on the third level of Wisma Atria.
Amidst the sea of change disrupting the retail landscape, Cheong observed that pop-up stores are still on the rise as retailers test new markets with temporary stores whilst landlords try to fill vacancies. “The pop-up concept used to be popular amongst e-retailers trying to reach a wider audience, but the model has since grown beyond online retailers to encompass established fashion labels as well as luxury brands. In general, pop-ups benefit both landlords and retailers. whilst the unique concept draws in crowds to malls, pop-ups also help to build buzz for brands,” he added.
He noted that as the lease terms are often shorter, pop-up stores are a more cost-effective option to create physical presence in premier shopping belts like Orchard Road and Marina Bay Sands (MBS) where rents are on the high side.
Following the launch of Chanel’s pop-up store at MBS last year, Miu Miu opened a 1,205-sqft disco-themed shop space at Paragon whilst Fendi brought in its Fendi Kiosk to ION Orchard in February.
On the other hand, suburban malls performed better, buoyed by factors such as convenience and proximity to captive markets in perimeter neighbourhoods.
“For instance, the newly-expanded Northpoint City enjoys high foot traffic due to its accessibility to the MRT station and bus interchange. After the completion of enhancement works, its occupancy rate improved further, from 70.9% to 81.2%,” Savills said.
Cheong added that Northpoint City has allotted 100 out of 400 stores across six levels for F&B use. “In addition to the two food courts - Bagus (South Wing) and Kopitiam (North Wing) - the mall also offers a specialty food street, ‘The Makan Town’, which occupies 40,000 sqft in the South Wing’s basement level. Korean pizza chain, Pizza Maru, and Thai smoothie brand, Fruiturday, also opened their first stores in Singapore at Northpoint City.”
In addition to a variety of F&B choices, activity-driven anchor tenants also help to drive footfall traffic in malls.
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