SINGAPORE: A 40-year-old shopping icon in Orchard Road is at risk of losing its tenants to upcoming malls in the area.
Sources told Channel NewsAsia that about half of Shaw Centre's office and retail tenants had moved out within the last six months.
Many of them refused to renew their leases after Shaw raised rents by about 100 per cent.
Tyan and Betty Barclays, both upmarket boutiques on the ground floor of Shaw, are moving out over the next few months.
Tyan is going to ION and Betty Barclays to Orchard Central, both new malls that are coming up.
And they are not the first to ship out.
Gamon Video had moved to nearby Far East Shopping Centre in June last year.
The owner of the video outlet, Sandra Kok, said Shaw wanted to double her rent to about S$14 per square foot when her lease was up for renewal.
Ms Kok said: "When we asked them (Shaw) whether they were going to renovate, they said they were not sure yet at the moment. We also knew that we could not stay, because many of the shops were moving out. Recently when I checked, about 20 units were vacant, even the office (tenants) were also moving.
Some of them said they would find a new place." Some tenants who did not want to be named told Channel NewsAsia that they had not received the official word from their landlord about the centre's renovations.
Some said they only heard it through a centre manager. When contacted, Shaw declined to comment. It would only say that it is in the midst of finalising plans and an outcome is expected in a few months.
Still, it seems clear that older developments like Shaw Centre need to redevelop soon or risk losing tenants to newer malls.
Grace Ng, Deputy Managing Director, Agency and Business Services, Colliers International, said: "The ION Orchard, 313 Somerset, Orchard Central -- all these are actually competing for tenants, so it is inevitable that they (Shaw) have to redevelop. So whether it is a market downturn or upturn, you still need to redevelop and renovate to keep up with the times.
"But they may have to adopt a few strategies to ease the cashflow, like phasing up the development so that they can retain the tenants."
To attract tenants in this downturn, some malls have also implemented a flexible rent structure, pegging the rental to the tenant's gross turnover.
Ms Ng said: "In view of the market downturn, they may work out a lower base rent, a lower fixed cost and higher percentage turnover. That means the percentage turnover may be a bigger component.
"In light of that, they can also beef up their advertising and promotion budget. To attract shoppers to the mall, they can offer promotions such as free first hour parking, or tie up with credit card companies to offer discounts. All these will attract shoppers to the mall and in turn help tenants."
Source: Channel News Asia, 10 Mar 2009
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