Tenants bargain for lower rents at newly-renovated Suntec City Mall

Over a quarter of leases will expire in 2016.

Stubborn tenants will likely give Suntec REIT headaches in the coming year, as retailers now have greater bargaining power over lease renewals.

According to Moody’s, Suntec City Mall will experience weakness in rent renewals next year after completing the final phase of a three-year renovation project.

“As of 30 June 2015, the trust has 28% of leases by total retail net lettable area expiring in 2016, which we expect the bulk to be from Suntec City Mall because retailers that started their leases following the completion of phase one renovation in June 2013 are approaching the end of their first leasing cycle,” said Moody’s.

With a massive supply of mall space expected to come onstream in the next 12-18 months, retail REITs will be pushed to lower rents in order to keep tenants happy.

“We expect retail occupancy and rental rates in the downtown core area, made up of Marina Center and City Hall, to be under pressure as most tenants there cater to discretionary spending,” said the report.