Retail rent in Orchard/Scotts Road rises to S$40 psf

According to estimates by DTZ Research, rental values for prime first-storey retail space in Orchard/Scotts Road area moved up in Q2 2011. The average gross fixed rent of prime first storey space in the Orchard/Scotts Road area increased by 0.5% quarter-on-quarter to S$40.00 per sq ft per month in Q2 2011.

Although vacancies and tenant turnover are still affecting some malls in the Orchard/Scotts Road area, these are mainly confined to non-prime retail spaces. Prime spaces with good frontages along the Orchard/Scotts Road area are still much sought after. Such prime spaces are in short supply as Scotts Square is the only new mall to be completed this year while no new mall is expected in 2012 in the area.

“Prime retail spaces in the more prominent malls in Orchard/Scotts Road are still highly coveted by major retailers who wish to establish a strategic presence in Singapore. The limited new supply expected in 2011 and 2012 in the area has also lifted rentals for prime retail space,” observed Ms Anna Lee, DTZ’s Associate Director.

Rents in other city areas also experienced a slight increase in Q2 2011. The average gross fixed rent of prime first-storey retail space in other city areas grew by 0.6% QOQ to S$24.05 per sq ft per month in Q2 2011. While retail conditions in the Marina sub-sector remain challenging, mall performance in the Bugis/Raffles City and River Valley districts are performing well.

The average gross fixed rent of prime first-storey retail space in the suburban malls was unchanged at S$33.70 per sq ft per month in Q2 2011, constrained by the high level of rents which are back to the 2008 peak level and by the substantial potential supply. From Q2 2011 to 2014, near two-thirds of the island’s new retail space is estimated to come on-stream in the suburban areas. This excludes developments from the recent sales of Government Land Sales sites in Bedok, Punggol and Jurong Gateway which were sold with retail components and will add more retail space to the potential supply in the suburban areas.

“Islandwide rentals are expected to register a moderate increase in 2011. Notwithstanding the favourable economic climate, the retail industry has to cope with challenges such as the growth of online shopping, retail spending leakage overseas due to cheaper airfares from budget airlines and the strong local currency as well as competition from the casinos,” observed Ms Chua Chor Hoon, Head of DTZ South East Asia Research.