Sunday, May 16, 2010

Rise of the mall in the suburbs

More heartland shopping centres opening, others are revamped or expanded, thrilling residents

The flashy facades carry the logos of hip brands like Topshop, Mango, Uniqlo and Bakerzin.

Inside, the warmly lit, swanky interiors and a diverse retail mix put you in a good mood to spend.

But you are not in an Orchard Road mall.

Welcome to the bright new world of heartland shopping centres, even while their downtown cousins - Ion Orchard, Mandarin Gallery, Orchard Central and 313@Somerset, which opened last year - may have hogged more limelight.

Suburban malls are gaining strength in numbers, with new ones slated for Serangoon, Bedok, Clementi and Jurong. Existing ones, from Parkway Parade to Jurong Point, have been expanded and spruced up.

Why the big rush to the heartland?

Experts point to suburban malls' strong resistance to the effects of a recession.

Said Mr Colin Tan, research and consultancy director of property consultancy Chesterton Suntec International: 'Unlike downtown malls, suburban malls have their own captive catchment, which isn't affected by global situations.'

As downtown malls are dependent to some extent on tourist arrivals, takings are at the mercy of the volume of tourist arrivals, said Mr Nicholas Mak, a real estate lecturer at Ngee Ann Polytechnic.

And scares like the bird flu or terrorist activity may send tourist numbers heading south.

'Consumer spending at suburban malls may fluctuate with economic developments. But it would not be as volatile as that at Orchard Road malls where there may be a boom for six months and then a sudden dip,' Mr Mak said.

Big brands certainly know the value of a reliable stream of earnings from heartland branches. Japan's clothing brand Uniqlo saw fit to set up its first store last year in Tampines One. It has since branched out to 313@Somerset and Ion Orchard.

The well-loved Robinsons department store could soon be in a heartland mall too.

The brand's owner, Dubai-based Al-Futtaim Group, was in talks with landlords, Robinsons chairman Jim McCallum had reportedly said. It now operates from Centrepoint and Raffles City.

For an idea of how much Singaporeans love their shopping, look no further than the annual Great Singapore Sale in June. Last year, a total of US$26.3 million (S$36.5 million) was spent by Singaporean MasterCard cardholders in the first weekend of the Great Singapore Sale - 7 per cent up from 2008.

But given that a mall exists in almost every heartland town now, mall owners have had to slug it out for supremacy. They are spending hundreds of millions to build extensions, reconfigure interiors and carve out new retail space from empty land.

Take CapitaMall Trust, which jazzed up Lot One in Choa Chu Kang with a new four-storey annex block in May last year. That added 50 shops, including Courts, MOS Burger, SK Jewellery and New York New York.

A CapitaMall spokesman said its portfolio of mostly suburban malls, like Junction 8 in Bishan and Tampines Mall, helped the firm weather the financial crisis last year. For the year ended Dec 31, its distributable income rose 18.3 per cent to $281.97 million while gross revenue grew 8.2 per cent to $552.7 million. 'The (suburban) malls maintained high occupancy rates and positive rental reversions, and provided income stability,' said the spokesman.

Other mall operators are not shying away from protecting their turf. Frasers Centrepoint Trust invested $38.6 million to put up a new wing at Northpoint.

The work, completed in late 2008, increased the size of the mall by more than 50 per cent to 235,000 sq ft and the number of shops from 90 to 168.

'Suburban malls serve a population residing within 3km to 5km around the mall. By fulfilling the daily requirements of shoppers with supermarkets and food-and-beverage offerings, suburban malls entrench themselves in the community,' said Ms Wendy Low, general manager at Frasers.

She said Northpoint draws more than 2.4 million visitors every month.

In the west, Jurong Point's new 303,000 sq ft extension made it Singapore's largest suburban mall. Opened early last year, the extension was built on formerly empty land as part of a $720 million project that included an air-conditioned bus interchange and a 610-unit condominium above the new wing.

Existing tenants said they benefit from the extensions and revamps. Most of the tenants at Jurong Point, Northpoint, Lot One and Tampines Mall told The Sunday Times they have enjoyed more traffic - some by up to 80 per cent.

A sales staff member at Lee Hwa Jewellery - an existing tenant at Northpoint - said business has sparkled. It is up 30 per cent to 40 per cent since the revamp.

Is shopping in suburban malls entering prime time? Shoppers said 'yes'. 'Now, it's a lot easier to get the things I want, from outlets like Cotton On and Aries,' said Fatrisyah Adina, 16. The student gets her retail fix at Lot One once every two weeks. She said Orchard Road is too far away for her liking.

For Madam Jacqueline See, 55, family outings are taking place closer to her Boon Lay home.

The property agent, who used to visit Jurong Point only occasionally, now goes there for meals thrice a week. 'I'm spending a lot more on food here,' said Madam See, who keeps the tills at Swensen's, Ichiban Sushi and Kuishin Bo ringing.

Source: Sunday Times, 16 May 2010

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