RETAILER John Little could soon vacate its large Orchard Road site, raising the possibility that more prime space on the shopping strip will be up for grabs.
John Little is the sole tenant in the seven-storey Orchard OG Building but the three-year lease expires on May 16. The company did not exercise its option to renew the lease, according to landlord OG.
Existing tenants often have priority in renewing a lease if it is within a contract’s pre-agreed terms.
This is usually done about six months before a lease ends but sources party to the agreement said that John Little’s option to renew expired late last year and no offers have come in.
John Little is part of the Robinsons Group, which includes the Robinsons and Marks & Spencer stores.
A Robinsons Group spokesman did not confirm or deny that John Little would vacate the premises.
He added: ‘John Little has a wide presence in Singapore both in the main Orchard Road and Marina shopping belts, as well as the heartland areas, and we continually review the locations of our outlets to ensure we stay relevant to our customers.’
John Little moved to the OG premises in 2007 from the Specialists’ Shopping Centre across the street that has since been redeveloped.
The building, which is opposite the newly opened 313@Somerset, is on freehold land with a gross floor area of 44,315 sq feet. It was last refurbished in 1992.
OG, a family-run firm and one of Singapore’s oldest department stores, said a few companies, some foreign, have expressed interest in leasing the space.
The company also owns other office and retail properties in Albert Street and at People’s Park and Orchard Point.
‘Although rents have dipped during the financial crisis, they have been going upward since about half a year ago, so we are optimistic about getting a good price,’ an OG spokesman said.
He added that the guide price is $10 per sq feet (psf), with the total rent amounting to about $443,150 per month.
This might seem like a steal, with property firm CB Richard Ellis (CBRE) reporting that prime Orchard Road rents averaged $32.40 psf in the fourth quarter of last year.
But Ms Chua Chor Hoon, the South-east Asia head of DTZ Research, said retail rents, even in the Orchard Road district, encompassed a wide range.
Since OG might want a single tenant for the large building, the average psf might be lower as it will take into account both prime and non-prime retail space, she added.
‘The profit margin is also lower for larger-format stores, such as department stores, as compared to stand-alone stores,’ Ms Chua added.
‘It is also harder to get a big tenant, so the landlord might take that into the rental consideration as well.’
Knight Frank group managing director Danny Yeo said the OG Building was ‘challenging’ as it occupied middle ground.
It was an awkward size, he said, too small and with a multi-level format that made sub-divided tenancy difficult, but also too big, making the search for a single tenant a tricky endeavour.
But the free-standing building had an excellent frontage that made it a good location in the Somerset area, which has been given a new lease of life with the opening of Orchard Central and 313@Somerset, he said.
Dr Lynda Wee, the chief executive of retail consultancy firm Bootstrap, said that health-themed concept stores or a retail brand with a strong following might be suitable candidates to take up the space.
*SCAPE – a youth-themed mall – is also due to open in Somerset Road in June. It has filled about 80 per cent of its 40,000 sq feet of retail and food and beverage space since the launch last September.
Retail rents are aso rebounding after four straight quarters of decline.
Rent for first-storey Orchard Road and Scotts Road space inched up 1 per cent in the fourth quarter of last year after falling 7.3 per cent since the third quarter of 2008, said DTZ Research.
CBRE also reported that $801.5 million worth of retail investment transactions were concluded in the fourth quarter of last year, making up 85.5 per cent of the full-year total.
Mr Yeo expects rents in the Somerset area to start climbing 3 per cent to 5 per cent towards the later part of this year.
‘The vibrancy of Somerset will definitely increase and if the economic recovery is sustained, I believe that in two or three years, rents in this area will increase more significantly as well,’ he added.
Source: Straits Times, 9 Jan 2010
No comments:
Post a Comment