Retail demand softens as vacancies edge up

JLL says rents held firm in prime space.

Retail occupier demand softened in the fourth quarter of 2025, as store closures and cost pressures pushed some retailers to seek cheaper space, according to JLL.

The property consultancy said retail sales were supported by stronger discretionary spending during the Formula One race and year-end festive period, whilst tourism recovery remained on track. However, it added that consumer confidence stayed cautious and demand was uneven across assets.

Islandwide vacancy rose QoQ, although JLL said the increase remained contained as landlords prioritised occupancy. Suburban vacancy edged up as underperforming stores, particularly in non-prime locations, closed, whilst Prime vacancy was unchanged and Secondary vacancy dipped.

Prime retail rents were stable in the quarter, supported by steady demand for prime-level space and proactive asset management by landlords.

JLL said the Secondary submarket recorded stronger rental growth, backed by the return-to-office trend, whilst the Suburban submarket saw firmer capital value growth as yields compressed on stronger deal flow.

For full-year 2025, JLL reported net absorption of negative 0.05 million sq ft, completions of 0.05 million sq ft, an overall vacancy rate of 1.6%, and gross rent of $37.8 per sq ft per month. Year-on-year rent growth was 0.6%, with Singapore classified in a “growth slowing” stage of the rental cycle.

Looking ahead, JLL said persistently high operating costs and weaker domestic consumer confidence were likely to weigh on business viability and lead to more retail closures.

It expects vacancy to rise despite moderated supply, with the softer economic outlook capping rent growth, although stable yields and a positive spread over funding costs should continue to support capital values.