Shopping mall rents to fall by 5% as stingy retailers exit

Shops are downsizing as costs escalate.

Singapore’s retail market remains deeply challenging for both local and multinational retailers. An increasing number of shop owners are choosing to downsize in order to rein in their ballooning overhead costs.

According to CBRE, the outlook for the retail market is likely to remain challenging in the next 6-12 months, unless there are positive catalysts such as the relaxation of employment rules.

CBRE also noted that the vacancy rate is likely to increase on the back of an influx of new supply and increase in shadow space. Shadow space could enter the market as there are talks that some anchor tenants are looking to reduce their space footprint in 2015.

“In addition, the rising number of retailers implementing online sales platforms could gradually lead to some requiring less physical space. While prime rents should hold steady or increase marginally, the average rents for shopping malls are likely to fall 3%-5% in the next three to six months due to further pressure on,” the report stated.