Tag Archives: Retail Space

Takashimaya wins rent dispute with landlord Ngee Ann Development

The court fight between Takashimaya and its landlord Ngee Ann Development (NAD) over calculation of rent has concluded in favour of the department store.

The High Court, in a written judgment on Wednesday (Sept 14), agreed with Takashimaya’s contention that rental rate for the next five years should be valued based on the existing space configuration.

NAD had sued Takashimaya last year after both sides reached a deadlock on how “prevailing market rental value” in the lease agreement was to be interpreted.

Since 1993, Takashimaya has been the anchor tenant at the Ngee Ann City building, occupying about 56,000 sq m, of which 38,000 sq m is used for its department store and 13,900 sq m is sublet to speciality shops.

In 2013, NAD proposed to revise the rent to $19.83 per square foot (psf) a month, more than double the existing rate of $8.78 psf.

This was based on a valuation report that reconfigured the layout to reduce department store space and increase speciality shop space. The latter commands higher rent.

After Takashimaya rejected the report, they agreed to each nominate one valuer and take the average of the two valuations.

They also agreed that any correspondence to the valuers had to be copied to the other side.

But NAD sent a letter to the valuers, telling them to use a hypothetical configuration, without copying it to Takashimaya, in what it later said was an “administrative oversight”.

Takashimaya, represented by Senior Counsel Alvin Yeo and Ms Lim Wei Lee, insisted that both sides first agree that valuation has to be based on the existing configuration, like how it had been done in previous valuation exercises.

NAD, however, said that rental value is not required to be based on any specific configuration. It sued Takashimaya, seeking to compel it to complete the valuation process.

In her written judgement, Judicial Commissioner Debbie Ong said the terms of the original lease and the intentions of the parties at the time they entered into the lease are the most relevant in interpreting the phrase “prevailing market rental value”.

The judicial commissioner said that the relationship between Ngee Ann and Takashimaya is more like a joint business partnership rather than the typical landlord-tenant relationship.

She noted that while the lease started running in 1993, it was only in 1998 that both sides came to agree on the quantum of rent and the net floor area. She also noted that Takashimaya’s Japan parent company has a 26.3 per cent stake in NAD and has four directors on NAD’s board.

The provisions in the lease reflected the parties’ intentions for their business relationship to continue for a considerable length of time, she said. Takashimaya also had “extensive rights” under the lease.

She found that the intention of both parties at the time they entered into the contract was to have a long-term relationship in which Takashimaya would operate its department store as Ngee Ann City’s anchor tenant and NAD would enjoy strong property values as a result of that.

Given this “somewhat symbiotic relationship”, it would be inconsistent with the parties’ core understanding and agreement for NAD to obtain rent based on the highest and best hypothetical use of the premises even while Takashimaya continues to use nearly 70 per cent of its leased space for its department store.

“The consequence of using such a basis is that Takashimaya would pay far higher rent based on a hypothetical reduced area designated for departmental store use that fails to cohere with its actual use,” she said.

She also urged both sides to “resolve their disputes amicably” in the light of their long-term business relationship.

New Funan mall to feature retail innovation, new live-work-play paradigm

THE new Funan mall, when ready in the fourth quarter of 2019, will be a platform that “inspires retail innovation” and offers a “new paradigm” for living, work and play, said CapitaLand Mall Trust.

The developer will unveil at the groundbreaking ceremony on Wednesday that the new mall will simply be called “Funan” – it was originally Funan DigitaLife Mall – as a tribute to the site’s legacy and an acknowledgement of the public’s affection for the name.

Funan will go beyond selling IT products to “incorporating the tech experience throughout the entire integrated development”. For one thing, it will offer online-to-offline (O2O) retail services to target on-the-go mobile-first customers. These include a drive-through, click-and-collect and hands-free shopping service, where customers can choose to either pick up their purchases at Funan’s concierge when they are done, or have their shopping bags delivered to their homes. The service is said to be a first in the Central Business District.

Funan will have a total gross floor area (GFA) of 887,000 sq ft. Occupying more than half the GFA at 500,000 sq ft will be the mall, a six-storey retail component which comprises four levels above ground and two basement levels. Three towers will sit above, including two six-storey premium Grade A office towers from Level 5 to Level 10 with a GFA of 266,000 sq ft, and a nine-storey block housing 279 co-living apartment units from Level 4 to Level 12 with a GFA of 121,000 sq ft.

Funan will feature a “mobile-first digital platform” that is linked to a smart car parking and smart access system, said to improve productivity, energy efficiency and security. It will also offer full amenities and end-of-trip facilities for cyclists, including bike shops, bike cafés, lockers and shower facilities. Funan said this is to support the country’s move towards a car-lite society and to promote healthy living.

Compass One to reopen in September with larger library, new playground

The Compass One mall in Sengkang will reopen in September after being closed for nearly a year for renovation works, owner M&G Real Estate said in a press release on Thursday (Jul 28).

The revamped mall will have a larger library spanning two floors, more educational facilities, larger common areas, and improved amenities including a children’s wet and dry playground.

New tenants include Challenger, Coffee Bean & Tea Leaf and Owndays. They will be joined by anchor tenants Cold Storage, Sengkang Public Library and Kopitiam, as well as long-term tenants like POSB, Kiddy Palace, Starbucks, Pizza Hut and Popular.

So far, 95 per cent of the mall’s retail space has been leased. Tenants started moving in last month to fit out their retail space following the granting of the Temporary Occupation Permit, M&G Real Estate said.

The shopping centre was previously known as Compass Point, before it held a naming contest on social media. The name Sengkang Mall was picked, but after criticism from members of the public, it was changed to 1 Sengkang Mall, and later changed again to Compass One.

Source : Channel NewsAsia – 28 Jul 2016

Redeveloped Funan mall to be completed in 2019

Funan DigitaLife Mall, which closed this July, will undergo three years of redevelopment works, according to CapitaLand Mall Trust Management on Friday (Jul 22).

This is to enhance the site’s attractiveness as a lifestyle destination in the revitalised Civic and Cultural District in Singapore, according to its press release.

Slated to be completed in the fourth quarter of 2019, the new integrated development will comprise retail, office and serviced residence components measuring approximately 887,000 square feet in total gross floor area – almost double its current size, it said.

CapitaLand Mall Trust Management, the manager of CapitaLand Mall Trust, also announced that CMT’s distributable income for the first half of the year was S$193.9 million, a 3.7 per cent increase over the S$186.9 million for the same period last year.

Distribution per unit (DPU) for the same period was 5.47 cents, a 1.5 per cent increase over the DPU of 5.39 cents for the same period last year, it added.

For the Apr 1 to Jun 30 period, the distributable income was S$97.1 million, a 3.3 per cent increase over the S$94 million for the same period last year. DPU of 2.74 cents for the second quarter was 1.1 per cent higher than the 2.71 cents for the same quarter last year.

Source : Channel NewsAsia – 22 Jul 2016

Drop in prices for office retail spaces

Singapore office space prices fell by 1.5 per cent in the second quarter. Rentals of office space also fell by 3.5 per cent in this quarter, compared to the 2.1 per cent dip in the first quarter of the year, URA figures showed.

Meanwhile, prices for retail space fell by 3.1 per cent in the second quarter, following a 1.9 per cent dip in the previous quarter. Rentals of retail space also fell by 3.9 per cent in the second quarter, compared to the 1.9 per cent drop in the first quarter, it added.

In terms of the amount of retail space available, URA said the island-wide vacancy rate rose to 7.8 per cent at the end of the second quarter, from 7.3 per cent at the end of the previous quarter.

Source : Channel NewsAsia – 22 Jul 2016

Rents of Grade A CBD offices, prime retail spots facing pressure

Rents across both Grade A CBD office spaces and prime retail spots will likely continue to face pressure in the coming 12 months, says property consultancy Cushman & Wakefield in its Q2 Marketbeat reports. It forecasts declines across the board, except for prime suburban retail which has a stable 12-month outlook.

On the retail front, the consultancy noted that there are increased food and beverage (F&B) components in shopping malls and department stores to combat the surge of e-commerce. It also noted that the paradigm shift in shopping is becoming more evident, and that brick and mortar shops will be inadequate in today’s context.

Prada had earlier announced plans to advertise via Snapchat and that it will be offering a range of goods online; meanwhile the Singapore Tourism Board is using WeChat and Baidu Connect to reach out to independent Chinese travellers.

According to Cushman and Wakefield’s basket of goods, average prime rents along Orchard Road declined by 0.8 per cent quarter on quarter, as demand from international brands for shop-fronting prime space is still relatively steady.

Prime rents for ground floor units with good frontage sized below 3,000 square feet in the suburban areas meanwhile dipped 0.4 per cent while average prime rents in the city fringe fell by 0.6 per cent quarter on quarter.

That being said, demand is still relatively high for soon-to-be completed projects. Retail space at Compass One is 90.0 per cent pre-committed, ahead of its target opening in Q3. Meanwhile, Marina One is 50.0 per cent pre-leased with tenants such as Virgin Active, Cold Storage, and Cookhouse by Koufu.

“In the longer term, we expect rentals for prime space in the city fringe to be boosted by the completion of alteration and addition (A&A) works from major developments in the City Hall/Marina Bay cluster,” it said.

In terms of office outlook, Cushman and Wakefield noted that it is an opportune moment for companies who have been waiting on the sidelines to secure premium spaces at favourable rental rates.

According to its basket of goods, the overall Grade A CBD vacancy rate dipped 0.4 percentage point to 4.2 per cent in Q2.

Marina Bay’s vacancy rate declined to 5.5 per cent, down from 6.0 per cent while the vacancy rate in Raffles Place decreased to 2.9 per cent, down from 3.7 per cent in the previous quarter.

It is worth noting that there is still 1.88 million sq ft of space under construction in the Marina Bay area, and 2.44 million sq ft of space under construction in the Shenton Way/Tanjong Pagar sub-market.

The overall Grade A CBD rent moderated by 1.1 per cent to S$8.86 per square foot per month in the second quarter. Marina Bay rents declined by 1.4 per cent during the quarter to S$9.56 psf per month, while rents in Raffles Place slid 2.0 per cent to S$9.13 psf per month.

The report also notes that there was an uptick in office leasing activity during the second quarter, with a slew of leasing deals in upcoming projects which are slated for completion in the next six months.

Marina One reportedly achieved 550,000 sq ft in leasing pre-commitments, translating to a pre-commitment rate of 30 per cent. GuocoTower also saw substantial take-up of space during the quarter. Tech firm SAS leased a sizeable 20,000 sq ft of floor space in GuocoTower and will be relocating from Twenty Anson.

Looking ahead, the consultancy said that it expects the insurance segment to continue driving office leasing activity as the increasing frequency of cyber attacks, along with the government’s ongoing Smart Nation initiative, will boost demand for cyber insurance.
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Bangladeshi group pays S$135m for Centrium Square’s retail space

ALL the retail space of Centrium Square, which will come up on the current Serangoon Plaza site in Little India, is understood to have been sold to a foreign investor for S$135 million.

This works out to S$4,967 per square foot based on the freehold strata area of 27,179 sq ft – all on the first two levels.

The purchase is being made made by Canali Logistics, a Singapore-incorporated vehicle of Mohammed Saiful Alam, who controls Bangaldeshi conglomerate S Alam Group, which is involved in a range of activities, including agrobusiness, consumer products, cement, steel, power, energy, transportation, shipping, manufacturing, trading and property.

Through Canali Logistics, Mr Saiful Alam also acquired Hotel Grand Chancellor on Belilios Road, also in Little India, for S$248 million in 2014. The hotel has since been renamed Grand Imperial Hotel Singapore and word on the street is that it will soon undergo a revamp and thereafter be rebranded as a Hilton Garden Inn.

Canali Logistics has also been reported by Malaysian media as having made an offer a few months ago to IGB Corp Bhd for its Renaissance Kuala Lumpur Hotel.

At Centrium Square in Singapore’s Little India district, Mr Saiful Alam has picked up all 49 retail units – all on the first two levels – in the 19-storey proposed development. It will also have offices and medical suites, and is expected to be completed in 2020. Demolition works on the existing five-storey Serangoon Plaza on the site are expected to begin early next year.

Centrium Square will be developed by Feature Development, a unit of Tong Eng Group.

When contacted by BTWeekend, a spokeswoman for Feature Development said: “Our original plan was to retain all the retail space in this project for long-term investment. But when we received an unsolicited offer from a buyer through an agent, to take up all the retail units, we agreed to sell. What we didn’t want was to do individual strata unit sales of the retail space; however we did not mind selling the space on an en-bloc basis to a single purchaser.”

She did not comment on the buyer’s identity but confirmed the price, which she described as “fair”.

In the Lavender Street area, Trend Developments, which has some common shareholders as Tong Eng Group, is developing Arc 380; in early 2014 it sold eight street-level retail units on a piecemeal basis at an average price of S$5,900 psf. It has also found buyers for 52 office units designated for sale at an average price of S$2,450 psf. The 16-storey freehold project is slated for completion next year.

At Centrium Square, Feature Development has earmarked six office floors (levels 9 to 14) for strata sale. Since late-March, it has found buyers for 27 of the 78 office units on these six levels at an average price of S$2,500 psf.

Commenting on the nearly S$5,000 psf achieved for all the retail units at Centrium Square, Knight Frank executive director Mary Sai said the pricing reflects the buyer’s confidence in the retail trade in that locale despite the challenges created by the rise of online retailing.

“The transaction will give the buyer full control of the tenant mix and allows him to come up with a strong concept. He could do an electronics mall for example; a lot of visitors go to the 24-hour Mustafa Centre nearby to buy electronic goods. Or he could do a hypermarket or a wholesale retail venue.”

Ms Sai hoped that news of the sale of Centrium Square’s retail space will inject some confidence in the flagging retail property market.

Nine shop units in Holland Road Shopping Centre up for sale

Nine units of Holland Road Shopping Centre and one unit of 211 Henderson, an industrial building, are up for sale, either collectively at a guide price of just over S$24 million or on a piecemeal basis. All of them are freehold units and are being sold with vacant possession.

They are owned by two companies controlled by the Lim family that used to operate Lim’s Arts and Living, out of eight of the Holland Road Shopping Centre units. All nine shop units are on the second level.

Lim’s Arts and Living, which used to sell mainly furniture and furnishing goods, closed about a year ago. The sale of the 10 units is said to have arisen from a resolution of differences within the family.

CBRE is the sole marketing agent for the public tender exercise, which will close on Aug 23.

The 211 Henderson industrial unit, which is on the second level, has a guide price of S$3.23 million or S$650 per square foot based on its 4,962 sq ft strata area. It is ideal for light industrial use, with activities such as printing, photocopying, photographic film processing, packing and storage, commercial laundry, assembly and disassembly, said Sammi Lim, CBRE director of investment properties.

Over at Holland Road Shopping Centre, which is next to the Holland Village MRT Station, the units range from around 237 sq ft to 732 sq ft. Their guide prices are S$1.09 million to S$4.17 million – adding up to S$20.85 million, which works out to an average price of S$5,085 psf based the total strata area of 4,100 sq ft.

Ms Lim said: “The units will appeal strongly to end-users who have been on the lookout for shops to purchase and operate. For investors, the freehold status and potential yield return would be key attractions.”

The landmark development in Holland Village has well-known names such as Cold Storage and United Overseas Bank that have been operating in the building for years.

Said Ms Lim: “Assets in the Holland Village location are always very tightly held and it is extremely rare for any to be available for sale. Widely regarded as a successful enclave, the purchaser is expected to benefit greatly from the area’s fast evolving development and continued rejuvenation.”

Funan to close for three years for redevelopment

Funan DigitaLife Mall will close its doors on Thursday night after being operational for 31 years to make way for three years of redevelopment works.

CapitaLand’s senior management will host a “thank you” party for some 400 invited guests comprising tenants, loyal shoppers and mall staff at Funan’s Main Atrium to celebrate the mall’s milestones over the decades as it prepares to start a new chapter.

“As the definitive IT mall over the last three decades, Funan holds a special place in the hearts of Singaporeans,” said CapitaLand in a statement.

“The new Funan will strive to be a dynamic mall. . . Technology has always been a big part of Funan and we will build on that legacy, moving from just selling IT products to enriching people’s lives with technology,” said Wilson Tan, chief executive of CapitaLand Mall Trust Management.

Katong Shopping Centre put up for collective sale for a third time

Katong Shopping Centre has been put up for collective sale for the third time.

The reserve price is set at S$630 million. This translates to a land price of S$2,248 per square foot per plot ratio.

The mall, which contains 425 units, sits on a freehold plot of nearly 87,000 square feet. Situated along Mountbatten Road, it houses among others, offices, employment agencies, printing and tailoring services shops, and eateries.

According to marketing agent Cushman & Wakefield, owners controlling at least 80 per cent of the share value and total area have agreed to the proposed sale.

The mall launched its first attempt at an en bloc sale in January 2010 for S$445 million. The deal fell through, and a second attempt was launched in June 2014.

Katong Shopping Centre was Singapore’s first air-conditioned mall when it opened its doors in 1973.

Source : Channel NewsAsia – 15 Jun 2016