Orchard Road losing lustre as major retailers turn to regional centres

Rental premium slipped by 2%.

Orchard Road is losing its edge as retailers turn to underrated regional centres in their quest to capture more shopper dollars. According to a report by Colliers, the rental premium that prime retail space in Orchard Road commands over similar space in the Regional Centres shrank from 9% as of the end of 2013 to 6.9% in end-2014.

“The rental trends in 2014 indicated that retail activities have gained greater prominence in residential town centres islandwide and are no longer as heavily concentrated in central Orchard Road locations,” said Calvin Yeo, Deputy Managing Director of Colliers International.

He added that much of the demand for retail space throughout 2014 has been supply-led, as major retailers
target new mall openings as opportunities to expand into new locations.

A number of well-located new malls have achieved almost full occupancy by the time of their scheduled openings, such as the Seletar Mall in Sengkang West Avenue and OneKM in Paya Lebar, which reported 99.6% and 93% occupancy upon opening.

For 2015, Colliers forecasts that rental growth for prime ground floor retail space in the Orchard Road district is forecast to range between -1% and 1, while that in the Regional Centres could plateau at between 0 to 2%.

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