Retail rents slips 2.4% in H1 2021: Colliers

Average retail rents were expected to decline 1.8% by 2021. 

Retail rents in Singapore declined 2.4% in the first half of 2021 despite a positive net absorption from -280,000 square feet (sq. ft.) as landlords prioritised occupancy over rents, according to Colliers Research.

June Chua, executive director and head of Tenant Representation at Colliers, said they expect average retail rents to decline 1.8% in 2021 “higher vaccination rates could allow for a potential easing of restrictions towards the end of the year."

“Overall, we can also expect a positive net absorption in 2021 as the economy recovers while supply remains muted," he said. 

Colliers also said that ground-floor rents on Orchard Road declined 2.7% half-on-half (HoH) in the first half of 2021 to SG$36.24 per sq. ft, whilst the Regional Centres declined 2.0% HoH to SG$31.05 per sq. ft., due to the impact of Phase 2 (Heightened Alert) tighter restrictions which prohibited dine-in, and lowered mall occupancy limits and permissible group size.  

Colliers also said that the pandemic “has accelerated the ongoing recalibration of the retail industry.”

Jonathan Denis-Jacob, director and head of Advisory and Consulting at Colliers, said the exit of unsuccessful brands gives opportunities for new brands to enter the market. He also said that landlords are compelled to reconsider “tenant optimisation, asset repositioning, and placemaking strategies in response to changes in the retail industry.”

He cited as an example the opening of Honey's Bar of its first store in Jurong Point and the launch of the BTS pop-up store at Funan following its earlier success at Plaza Singapura, amongst others.

Meanwhile, Colliers also said that retail transaction volumes declined 78.3% HoH to S$564m from a high base due to Frasers Centrepoint Trust’s purchase in the second half of 2020 of the remaining 63.1% stake in the Asia Retail Fund which owns five suburban retail mall in Singapore, as part of its portfolio.

Steven Tan, executive director of Investment Services at Colliers, said the few notable deals in the first half were the “divestment of YewTee Point by Frasers Centrepoint Trust, and Low Keng Huat's acquisition of a 45% stake in Paya Lebar Square in a stake swap deal with Sun Venture."