Regional hubs' rents may top average levels

Straits Times: Tue, Jan 17

MALLS and shops in government-designated regional hubs could bring in above-average rents, but they will still likely lag behind that of established centres like Tampines and Bishan, said analysts. R'ST Research said average suburban retail rents based on total mall net lettable area were $12 per sq ft (psf) to $15 psf a month as of the end of last year. While it is hard to pinpoint how much more malls in the new commercial hubs can achieve, the consultancy believes rejuvenation development in Jurong East and Paya Lebar could drive rents up to and beyond that $15 psf level. The lure for landlords and tenants would in part come from the Government's endorsement of these areas, although factors such as how the mall is positioned and prevailing economic conditions would also play a part. Signs of transformation are already evident in Jurong East and Paya Lebar. Several tracts of commercial land have been put up for sale through government land tenders and transport links, such as the new Jurong East Bus Interchange, are being developed. Ms Sulian Tan-Wijaya, Savills Singapore senior director of retail and lifestyle, said the established centres are more likely to have an edge over other suburban retail hubs given their well-developed transport links, amenities and a dense surrounding population of potential shoppers. Malls built by more established retail developers, with their ability to attract the right tenant mix, would also generate higher rents, she added. Other consultants said existing malls in more established suburban retail districts will not lose out. 'The existing suburban malls are all mature malls and the businesses are predictable and steady, so I am of the view that rents will not fall or, even if they do, it will be marginal,' said Mr Charles Ng, director of retail at Colliers International. R'ST director Ong Kah Seng agreed, noting that such malls are 'tried-and-tested products' that will continually anchor shopping interest from residents in the vicinity. He added that it will require some time for the upcoming commercial districts to fully develop or be sufficiently rejuvenated. But some malls within established suburban towns will still be affected by the new regional hub malls. Ms Tan-Wijaya said: 'For example, in places like Ang Mo Kio, not all the malls are centrally located, so it will be harder for them to compete with the new malls at the regional hubs.' While analysts expect a slight dip in suburban mall rents this year, they predict a positive longer-term outlook, with rents remaining resilient or continuing to show slight improvements due to shopper demand. This positive trend will bode well for the upcoming regional hubs, they noted, especially for those with retail spaces that will be completed within the next few years. [e-mail] SUBURBAN RENTS WON'T LOSE OUT 'The existing suburban malls are all mature malls and the businesses are predictable and steady, so I am of the view that rents will not fall or, even if they do, it will be marginal.' Mr Charles Ng, director of retail at Colliers International Source: The Straits Times