Rents decline slows amidst retail recovery

Retail rents are expected to stabilize, after a predicted decline of 5%.

Island-wide prime retail rents contracted by 12.9% YoY in the first quarter of 2021 to average $26.60 per square foot per month (psf pm), as the pick up in retail activity remained uneven and limited due to restrictive dining capacity limits still being enforced, according to a report by Knight Frank

The report said that average gross rents of prime retail space in Singapore generally slowed to a glacial pace, with the exception of prime retail shops in Orchard, due to the continued lack of tourists impeding any substantial rebound in retail activity.

“As workplace capacity increased to 75% from 5 April 2021 onwards, footfall at retail stores is set to rise, particularly those located in the Central Business District (CBD). The return of many workers to the workplace should provide for an improvement in retail sales albeit at a moderate pace, as a majority of firms continue to implement flexible work arrangements,” KF said.

With more easing of measures, Knight Frank said that prime retail rents should bottom out and stablise in the next six months after having declined by about 5% in 2021.

“Malls in the City Fringe and Suburban areas are generally already bottoming out and should show signs of recovery in the coming months,” the property consultancy firm said.