Shoebox shop rents in Singapore are 40% pricier than larger units

Don't be fooled, warns analyst.

Knight Frank highlighted the impact of URA's new retail size guidelines on rentals and commercial viability.

It noted that in general, smaller units command higher rental on a per square foot basis than larger units. The rent per sq ft for a small unit of 10 to 25 sqm could be 20 to 40 per cent higher than a larger unit of 26 to 50 sqm located at the same floor with similar frontage.

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The retail industry is gradually becoming more cost sensitive. In addition to rental cost, labour and material costs are increasingly squeezing retailers’profit margin.

Hence, retailers are expected to be relatively sensitive to the total rental quantum, and small shop units will be preferred over larger ones. However, not all trades will be able to take small shops, and this will depend on the location of the development, consumer demand for various trades and services, as well as retailers’ demand.