Just as the gap between commercial rentals in central and suburban malls seem to be narrowing, five suburban mall projects are set to cause it to widen once more.
The five projects are 112 Katong, Changi City Point, Junction 10, JCube and Alexandra Retail Centre. In total, they will contribute some 756,400 sq ft of net lettable area to suburban mall space. Conversely, the only retail property to sprout up in the Orchard area is Scotts Square, which will be ready for visitors this year.
Indeed, a report conducted by Savills Research say that most of the new retail space that will be created this year will be found in off-central parts of Singapore, to cater to the growing number of heartland shoppers. Suburban malls are expected to lower their rental rates to retain their tenants, in light of the surge in retail space. Meanwhile, the land constraint in Orchard Road, along with its massive throngs of shoppers, is set to make rental space there even more expensive.
(Ion Orchard is one of the more successful shopping centres along the Orchard Road belt. Image courtesy of Singapore Tourism Board.)
Previously, the rental gap had reduced when an increase in suburban shoppers was spotted, thus increasing the rental rates of heartland malls. A CBRE Research report on retail rents for the first quarter of 2011 revealed that the monthly rates for Orchard Road averaged $30.10 per sq ft (psf), while the monthly rates for a prime spot away from town averaged $29.10 psf.
A noteworthy observation is the vast difference in rental rates among the various shopping centres in the Orchard area. While more successful malls can charge $60-70 psf a month, and its less popular counterparts command merely half that amount. Factors like a lack of competition, convenient location, availability of nearby amenities and good mall management for bringing in a strong tenant mix contribute to a high monthly rental rate.
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