RetailBX.sg - Suburban Malls Attracting High-end Tenants

Apr 9, 2012
CommercialGuru.com.sg
by Cheryl Tay

Although Orchard Road in Singapore has been recognised as the world’s top shopping street destination, suburban malls are keeping pace by luring high-profile international tenants to themselves.

According to The Straits Times, three malls — 112 Katong in East Coast Road, as well as JCube and Jem in Jurong East, have attracted several high-end international brands.

112 Katong signed a tenant agreement with Danish furniture store Bo Concept, while Swedish apparel giant H&M will open its second Singapore store in Jem. Japanese lifestyle retailer Francfranc will also open its first Singapore store in JCube, marking the international brand’s entry into Southeast Asia.

“Suburban malls have demonstrated their resilience during economic downturns and during times of low tourist numbers, such as the Sars period, and will therefore be attractive to retailers,” said Letty Lee, Director of Retail at property consultancy firm CBRE.

She noted that the appeal of suburban malls is attributed to the large pool of residents living nearby.

This has also caused a rise in suburban mall rents, with rental rates soaring to an all-time high in Q4 2011 at S$29.75 psf.

In contrast, rents in prime Orchard Road dropped significantly from their peak of S$36.76 psf in Q3 2008 to S$31.60 psf in Q4 2011.

The rental gap between top suburban and prime Orchard Road retail space also narrowed to its lowest level in the final quarter of 2011.

“Suburban malls have certainly evolved and reflect Singapore's growing affluence and the increasingly discerning tastes of the shoppers,” said Sulian Tan-Wijaya, Director of Retail at Savills Singapore.

“But it'll be a long time before you see a cluster of brands like Chanel, Louis Vuitton and Prada in a suburban mall. Suburban malls will never replace Orchard Road malls, which are where all the luxury shopping is.”