Retail vacancy could rise amidst supply influx

Ground floor rents in key areas could lead the gradual recovery amidst sustained flattening out of rents.

Singapore’s retail space vacancy could increase amidst the large supply influx in 2018, Colliers International said. The trend could go down however, with landlords discounting high retail rents for higher occupancy.

Colliers International noted that Singapore’s retail space supply was replenished by 226,000 sq ft across the island which could be tapered off over 2019 to 2022. The firm expects as much as 851,000 sq ft added to the supply from 2018 to 2022.

“We expect yields to remain largely flat over 2018 through 2022, with room for further yield compression,” the firm noted.

The retail rental market generally remained soft in H1 2018 as overall Central Region rents slipped 1.7% YoY in H1 2018, according to the Urban Redevelopment Authority.

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According to Colliers International, Orchard Road ground-floor rents stayed flat YoY at $40.39 psf pm during H1 2018, whilst the regional centres saw a marginal uptick of 0.3% YoY to $33.50psf pm which marked some stabilisation in ground-floor rents.

“We expect ground-floor rents to lead the gradual recovery, but overall retail rents should continue flattening out and stabilise over 2018 to 2022 as sector headwinds precipitated by e-commerce have not materially subsided,” they commented.