Tag Archives: Singapore Retail

Reinventing Orchard Road amid the subdued retail climate

ONE has to concede that Orchard Road is not the shopping belt it once was during its halcyon days. No longer do you see throngs lining the 2.2-kilometre boulevard, not even on weekends. Once regarded as the shopping and entertainment destination for Singaporeans and tourists alike, are Orchard Road’s glory days dwindling?

To better understand the wane of such a key shopping destination, it is worth looking at what has changed in the retail environment over the past few years.

Primarily, consumer purchasing patterns have changed. There is an increasing dependence on the convenience that e-commerce offers, and a rise in the popularity of suburban malls. The Great Singapore Sale, once a much lauded event, has lost its appeal due to thrifty shoppers seeking out favourable promotions online.

From a tourism point of view, there is now a higher focus on budget and culture travelling; shopping is no longer a focal point. Coupled with international brands having a higher global penetration (their brands are readily available back home and potentially cheaper), Singapore’s appeal as a key tourism destination for shopping seems to have waned.

 

 

However, all is not lost. Orchard Road still possesses many factors which makes it desirable. The strip is lined by iconic shopping malls, hotels and medical centres. These malls and hotels are home to a spectrum of fashion brands – from high street to luxury, and signature homegrown and international restaurants.

While it faces keen competition from Marina Bay Sands, Orchard Road still has the magnetic appeal for new market entrants to set up shop and generate brand awareness in South-east Asia. It is also worth remembering that it remains the longest retail strip in Singapore, which is a point of differentiation in terms of consumer experience.

There have been several initiatives introduced in an attempt to reinvent Orchard Road. These include the annual Fashion Steps Out, the monthly Pedestrian Night, and Rev-Up@Orchard to coincide with the Formula 1 Grand Prix, to name a few. Developers have also introduced redevelopment and asset enhancement works at buildings such as 268 Orchard Road and Centrepoint, as a means of reinventing the strip.

A more collaborative approach by the various stakeholders on Orchard Road is perhaps needed to regain its lustre.

Tourist destination

The fastest way for Orchard Road to raise its game as a tourist destination may be to consider increasing tourist-friendly initiatives that cater to the needs of not only leisure shoppers, but also transient ones.

Very often, tourists have a few hours to spare between their hotel check-out and flight. If facilities such as centralised baggage storage and direct buses to the airport are made available, Orchard Road could be the choice destination to fill up the last day of their travel.

In addition, mall landlords can also offer centralised concierge services for shoppers to have a shopping-bag-free experience, with their purchases collected on the way to the airport, prior to boarding the buses. From the local shoppers’ point of view, the concierge services can also include home delivery services.

Product differentiation

We need to remind ourselves that local shoppers remain the consistent pool of consumers. A rebranding and repositioning exercise is necessary for Orchard Road to appeal to local shoppers again.

In the current retail climate, the recipe for success for malls tends to be product differentiation and unique shopper experience. Mall landlords can leverage the pool of budding local designers by integrating them seamlessly with the existing premium brands in the malls. Instead of constantly looking outwards for new brands, landlords can also now look within and play a part in nurturing these designers, who can potentially be the next wave of household names.

Leveraging the wide tree-lined pedestrian boulevard, landlords can consider introducing more pop-up stores outdoors instead of containing them within the mall, with the aim of merely filling up empty spaces. These store formats will help create awareness for the brands and allow shoppers to be more familiar with them. This can also be a good way to attract overseas brands that want to test the level of brand acceptance in the Singapore market, without making a long-term commitment.

Place-making

Adapting to the evolving market sentiments and the needs of consumers is critical to the success of these shopping belts. Increasingly, there is a demand for a differentiated retail experience. It is now a necessity for shopping locations to have an overarching place-making strategy which includes activities planning and community engagement. This takes into account events and spaces which cater to the target demographic of both locals and tourists, encompassing both daytime and night-time activities.

Through active place-making, shoppers can expect events to be brought into the strip to create a more holistic shopping and recreational experience. For instance, on days when major sporting events are held, outdoor screenings of these happenings can take place in the open areas along Orchard Road.

In the past, marketing events such as Coca-Cola Happiness Creator Machine and the MediaCorp Subaru Car Challenge have successfully created some hype. Apart from centralised efforts by the Orchard Road Business Association (ORBA), more can be done by involving existing retailers operating along Orchard Road. For example, music festivals such as H&M Loves Music Festival can be held, combining people’s love for music with fashion.

Integrating offline and online retailing

While retailers on Orchard Road have been pampered with guaranteed footfall in the past decade, it is now time for them to step out of their comfort zones and be more proactive. There is always a limit to how far brick-and-mortar retailers can engage in price wars, and fighting head-on with online retailers by aggressively cutting prices is definitely detrimental to their business in the long run. What these retailers should do is work around the barrier that e-commerce has – the unique social interaction between the brand and the consumer.

While brands have increasingly gone online, we have also seen online retailers going in the opposite direction by setting up new-format physical retail stores. Such stores exist often not with the aim of producing sales numbers, but to act as a platform to bridge the offline and online retail experience.

For example, Zalora has had a pop-up tour in some malls to showcase its products to offline shoppers. Stylenanda, which has gained popularity over the years as one of the best Korean fashion websites together with its sister brand 3 Concept Eyes, has started setting up stores in the high streets of the main retail areas in Korea, Hong Kong, China and Thailand.

In the years to come, experiential retail will be the next wave of change we expect for the retail environment. Lines between offline and online retail will be blurred, and brick-and-mortar shops will double up as an avenue where shoppers can touch, feel and experiment with the latest products – sometimes even before the products are launched officially.

We will see technology increasingly integrated into traditional retail to offer shoppers a unique and interactive shopping experience. Some examples include augmented reality shopping catalogues and product descriptions, 3D scanning of body sizes, and virtual changing rooms. Being Singapore’s key shopping belt, Orchard Road landlords and retailers can spearhead this trend, and at the same time rebrand the whole shopping experience of the district.

Tech and sporting features headline Funan mall revamp

The upcoming Funan integrated development will include a Golden Village cinema, indoor climbing gym as well as a click-and-collect shopping experience, announced developers CapitaLand at the site’s groundbreaking on Wednesday (Sep 7).

The redeveloped Funan DigitaLife Mall, which is expected to be completed in 2019, will retain its digital roots by selling IT products. Additionally, the mall will incorporate the tech experience throughout the whole development, CapitaLand said.

The retail component, consisting a net floor area of 324,000 square feet, will be divided into three broad themes: Tech, Fit and Taste.

Under the tech cluster, Golden Village will operate a cinema with the latest in cinematic experiences while Kopitiam will operate a high-tech food court featuring tray and crockery return robots.

As part of the offline-to-online shopping experience, Funan will offer a drive-through click-and-collect shopping service where shoppers may pick up purchases at Funan’s concierge. They can also have their purchases delivered to the home.

Sports will play a big part in the new look Funan as there will be an indoor 50-lane climbing facility. Other sports facilities like basketball courts and futsal courts will also be incorporated, while it is looking to become Singapore’s first commercial building to allow cycling throughout the building.

Mr Lim Ming Yan, President and Group CEO of CapitaLand, said: “We are entering an exciting phase of real estate development driven by technology breakthroughs that are altering the fabric of our lives and the coming of age of a whole generation of consumers who grew up with the Internet. Funan is our response to these trends.”

Source : Channel NewsAsia – 7 Sep 2016

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.”