The rental decline came as several brands downsized their businesses.
This chart from Colliers International show that ground-floor rents on Orchard Road declined 1.5% to $40.60 psf monthly in H1 2019 compared to the last six months of 2018.
Meanwhile, ground-floor rents of regional centres remained flat at $33.6 psf per month, consistent with the Urban Redevelopment Authority's (URA) reported rental decline of 1.5% in H1 for the central region. With the latest decline, URA’s retail rental index has fallen 18.5% since its peak in Q4 2014.
Also read: Retail rentals down 1.5% in Q2: URA
Overall, rental declines have slowed since early 2018, and the large completions since 2013 should finally taper off from 2020 onwards. However, Colliers noted that the soft economy could impact fragile consumer sentiment and delay any rental increases. Furthermore, data from the Department of Statistics showed that retail sales (excluding motor sales) have fallen for four consecutive months in a YoY basis in May.
Colliers also noted that several brands have downsized their operations during the first half of the year. Notably, Crabtree & Evelyn shut down all its physical stores in Singapore as it moved operations online with a relaunched website and new product lines. Other companies that downsized include Isetan, Cold Storage, Marks & Spencer, MPH and Kinokuniya.
Other trends that the real estate company observed include “clicks-to-bricks”, or online stories eventually opening physical shops, an example of which was Love Bonito; “experiential retail”, which refer to unique customer-experience offerings; the rise of “subscription ecommerce” where curated products are shipped to customers on a regular basis; as well as the quicker shipping time to differentiate from saturated online offerings.
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