Hollywood artist Danny Minnick transforming a Lamborghini Urus S with his signature art style at the Village Square of One Holland Village (Credit: Art Works Group)
At the opening ceremony of One Holland Village, a pet-friendly shopping mall, on Dec 9, the main attraction was Hollywood artist, skateboarder, actor and director Danny Minnick. In a 30-minute performance, Minnick transformed a bright yellow Lamborghini Urus S with his signature art style at the Village Square. It also marked his inaugural exhibition, "18. Workz", at the new 2,000 sq ft Art Works Gallery in One Holland Village.
The 145,310 sq ft One Holland Village mall was fully leased when it opened in December. Likewise, the 50,000 sq ft retail space at Guoco Midtown on Beach Road opened 100% leased in January. The anchor at Guoco Midtown retail podium is Porsche Singapore Studio's 8,500 sq ft duplex showroom, with its first Café Carrera, a collaboration with Baker & Cook and a new Porsche Lifestyle Concept Store.
Guoco Midtown and One Holland Village are examples of healthy demand for retail space, says Angelia Phua, consulting director of research and consultancy at JLL Singapore. "We observed strategic expansion from diverse trades, primarily food and beverage operations, fashion apparel brands, active lifestyle/sports-related operations and beauty and wellness establishments," she adds.
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One Holland Village shopping mall was fully leased when it opened on Dec 9
Retail vacancy rates across the island fell from 8% in 3Q2023 to 6.7% in 4Q2023. According to URA's quarterly report, it marked the third straight quarterly drop in vacancy and the lowest since the 6.5% registered in 4Q2014. The drop in vacancy was led by the Central Region, which dipped from 8.8% to 7.8% last quarter. JLL's Phua attributes the decline in vacancy to "resilient occupier demand and moderated supply".
The URA's Central Region retail price index rose 1.2% q-o-q in 4Q2023, marking the third consecutive quarterly increase. The total y-o-y price growth was 1.2%, the first positive turn since 2019.
"Increased capital allocation towards retail assets likely drove retail asset prices higher as investors continued to favour quality retail assets for the rent growth outlook, the favourable supply-demand fundamentals of the retail property market, a positive yield spread over funding costs and the scarcity value," says JLL's Phua.
Similarly, retail rent grew 0.4% y-o-y, despite a 0.1% dip in 4Q2023, compared to a 2.4% y-o-y drop in 2022. With y-o-y growth in retail price and rent, Phua says, signs point to a continued recovery for the retail market.
Amid the recovering tourism sector, the main shopping belt along Orchard Road remains the destination of choice for both local and international retailers as they gear up for expansion and showcase their brands to the region.
Some retailers, however, have chosen to bow out, citing "growing online demand and higher cost of brick-and-mortar operations due to inflation and labour shortages", says Wong Xian Yang, head of research for Singapore & Southeast Asia at Cushman & Wakefield.
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For example, at ION Orchard, Swedish fast-fashion company H&M closed its store in March 2023, and US furniture brand Crate & Barrel shut its store and exited Singapore in June of the same year.
"Landlords of tier-one malls are optimistic that vacant spaces could be backfilled speedily given stronger tourist arrivals and increased tenant sales," says Wong. US lingerie company Victoria's Secret has already taken up H&M's vacated space at ION Orchard.
In contrast, weaker malls could continue grappling with higher vacancy rates and increasing property management costs, he adds.
The Orchard submarket saw strong positive net absorption of 19,000 sq m (about 205,000 sq ft), bringing vacancy rates down from 11.8% in 3Q2023 to 8.7% in 4Q2023.
Anecdotally, CBRE Research notes that demand for retail space was primarily driven by F&B operators and fashion brands such as Ju Xing Home, Fore Coffee, Tim Hortons, Marimekko and Cloud9 Studio. Pop-up stores, including Dyson Holiday Beauty Lab and Nintendo pop-up, proliferated in the quarter.
"The increase in tourist arrivals could have spurred retailers to take up space in the [Orchard] submarket, especially overseas retailers looking to showcase their brands to an international audience," reckons Tricia Song, CBRE head of research for Singapore and Southeast Asia.
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Examples include fashion brand United Colors of Benetton, which re-entered Singapore after exiting in 2015, while French luxury perfume brand L'Artisan Parfumeur and famous Tokyo "sandwich cookie" brand Press Butter Sand set up physical stores in Takashimaya Shopping Centre in 4Q2023.
The Orchard submarket saw strong positive net absorption of about 205,000 sq ft in 4Q2023
According to Song, Mice (meetings, incentives, conferences, and exhibitions) events and sell-out concerts for pop stars like Bruno Mars, Coldplay, Ed Sheeran, and Taylor Swift will boost tourist arrivals and should support demand for prime retail spaces.
"CBRE Research expects overall retail rents to maintain its growth trajectory in 2024," says Song. However, she points out that retailers may continue to face challenges such as staffing shortages, competition from e-commerce and higher operating costs.