LANDLORDS of retail space located in the city had little to cheer about in the second quarter.
According to a DTZ report yesterday, retail rents at Orchard Road and Scotts Road stayed flat, while those in other areas downtown fell slightly as more space came onstream.
The property consultancy found gross rents of prime first-storey space in the city outside Orchard Road and Scotts Road dipping 0.4 per cent quarter-on-quarter to $24.30 per sq ft per month (psf pm). Upper-storey rents in the same areas slipped 0.7 per cent to $13.90 psf pm.
The emergence of more retail space contributed to this. Over 815,000 sq ft of space was completed in the city outside Orchard Road and Scotts Road in Q2, DTZ said. The Shoppes at Marina Bay Sands accounted for most of this.
At Orchard Road and Scotts Road, prime first-storey rents remained at $39.70 psf pm in Q2, unchanged from the previous quarter. Upper-storey rents also stayed at $20.50 psf pm.
'Competition in the Orchard/ Scotts Road and other city areas has intensified' and consumers have become more selective with the increased range of retail choices, said DTZ associate director of retail Anna Lee.
'Retailers, particularly in the newer malls, are adjusting to the vagaries of consumer preferences, resulting in early termination of leases in some cases.'
The consultancy's longer term outlook for retail rents at Orchard Road and Scotts Road is brighter. Its South-east Asia research head Chua Chor Hoon said that with 'a limited amount of retail space' expected in that area in the next two years, rentals could 'trend gently upwards'.
Landlords of retail space in suburban malls had an easier time in Q2. Rents of prime first- storey space inched up by 0.3 per cent from a quarter ago to $33.60 psf pm, and those of upper-storey space rose 0.4 per cent to $22.90 psf pm.
Source: Business Times, 23 Jun 2010