SINGAPORE (EDGEPROP) - Shoppers are gradually returning to retail malls. According to the latest URA’s 1Q2021 statistics, net absorption for retail stores increased for the second consecutive quarter at 301,389 sq ft. The islandwide retail occupancy rate improved by a marginal 0.3 percentage points, standing at 91.5% in the first quarter.
While the rental market remains soft, CBRE Research notes that the rate of decline has slowed. In 1Q2021, the rental index decreased by 4.4%, which is a slower decline than the 5.2% decline in 4Q2020. The largest decline in rentals occurred in the central area, where rents declined 4.8% q-o-q in 1Q2021. Landlords continue to be flexible to support tenants’ requirements.
This indicates that recovery is uneven given the ongoing travel bans that affect shopping, dining and entertainment activities in Orchard Road and tourist haunts along the Singapore River and in the central area, says Leonard Tay, head of research, Knight Frank Singapore.
The stock of retail space expanded by about 107,629 sq ft in 1Q2021 and this was overtaken by the 7.7% q-o-q growth in the amount of occupied retail space, or some 301,389 sq ft during the quarter. Tay posits that this was supported by the increase in homegrown retailers setting up shop in malls as current circumstances allow local brands to ride on the nascent wave of recovery.
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But businesses continue to grapple with the challenges brought about by the Covid-19 pandemic. Tay believes that since work-from-home is no longer the default arrangement, footfall in the CBD should rise and boost retail sales. Rental declines are also easing, pointing to a potential bottoming-out in the next few months led by malls in the city fringe and suburban areas, he adds.
With five consecutive quarters of decline, the retail rental index for the central region has declined by 18.4% since the start of 2020. According to CBRE Research, this weakness is not broad-based as the performance of the suburban market has been resilient. Plus, there are some prime spaces that are still recording rental growth.