Retail space vacancy rate hit 7.5 % in Q4

A pickup in malls’ leasing demand countered tha vacancies from the Somerset Subzone.

The overall vacancy level of retail spaces held firm at 7.5% in Q4 2019, despite higher vacancy pressures forming in parts of Central Region, according to a Savills report.

Such challenges particularly came from vacated premises in the Somerset Subzone and the new supply from Tekka Place. The vacancy figure was thanks to the recovery in leasing demand from malls such as Suntec City Mall and Funan, where both its occupancy gradually picked up after the completion of enhancement and redevelopment works respectively.

The vacancy level in suburban malls are also said to have remained relatively stable because of new major tenants such as Don Don Donki, which recently opened in JCube.

Further, Savills noted that retail sales did not pick up in Q4 despite the increase in footfall. This could be attributed to overseas e-commerce giants that continue to absorb a significant share of total retail expenditure in Singapore. In contrast, the report stated that the F&B sector continued
its momentum with strong earnings for eight straight months, thanks to positive takings at fast food outlets and restaurants amidst the convenience of food delivery.

On the supply side, Q4 saw a supply injection of 657,000 sqft, raising total retail stock to almost 67.1 million sqft. The new supply mainly came from the completion of Tekka Place and Canberra Plaza. Notable developments that are expected to be complete in 2020 are Northshore Plaza 1, with net lettable area (NLA) of about 62,000 sqft; iMall, with NLA of 50,300 sqft; and 30 Raffles Place, with 51,400 sqft NLA.

Last January, Urban Redevelopment Authority (URA) reported that retail rental index inched up 2.3% QoQ in Q4, led by positive rental reversions in some malls and new and renewed leases from F&B tenants.

Looking forward, rents for prime locations are not expected to be too impacted by the novel coronavirus outbreak. “[T]enants, once they give up their space, find it difficult to identify an alternative,” said Alan Cheong, executive director at Savills.