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Shopping Mall Vacancies Highest In 5 Years! Retail REITs Gone Fuck?

JohnTan

Alfrescian (InfP)
Generous Asset
Vacancy rate in central region rises to 8.7% in first quarter amid challenging retail scene
Wong Siew Ying

ST_20160423_WSYRETAIL23_2239438.jpg


Vacancies at retail malls in the central region hit a five-year high in the first quarter of the year, driven largely by more vacant space in the Orchard sub-market.

The rate went up from 8 per cent to 8.7 per cent, analysis from Colliers showed, the highest since the Urban Redevelopment Authority (URA) started tracking retail space data including food and beverage, fitness and entertainment businesses from the first quarter of 2011.

In the Orchard planning area, the vacancy rates rose 1.2 percentage points to 8.8 per cent in the first quarter, URA figures showed.


These disappointing numbers come as the retail sector continues to battle rising costs, weak sentiment and increased supply of space. The islandwide vacancy rate of retail space rose to 7.3 per cent in the first three months of the year, up slightly from 7.2 per cent in the previous quarter.

Citing URA Realis data, analysts said retail rental volume plunged by 32 per cent to 1,725 transactions in the first quarter from 2,550 deals in the last three months of 2015.

"We are seeing higher vacancies setting in, particularly for the newer shopping malls," said Cushman & Wakefield research director Christine Li. "Besides spaces which have yet to fill up, spaces which tenants have pre-terminated also add to rising vacancy levels."

Century 21 Singapore chief executive Ku Swee Yong told The Straits Times malls with higher vacancies in the Orchard area include Shaw Centre, Orchard Gateway, Orchard Central and Palais Renaissance. "Vacancy rate in general will likely worsen in the coming quarters because some retailers have said they would be shutting their non-performing stores later this year," he noted.

Dubai-based conglomerate Al-Futtaim Group said last month it would shut 10 stores under its distribution and retailing arm RSH in the second half of the year. Its group chief executive for Asia Christophe Cann said yesterday: "At present, we are looking to exit at places where rentals are too high for us to continue to run a business."

He said landlords have a stake in the retail industry, and "it would benefit tenants, and the retail industry as a whole, by lending a helping hand during challenging times".

Sakae Holdings chairman Douglas Foo made a similar point, citing a good working relationship with the manager of Wheelock Place, where Sakae Sushi has an outlet. "When we talk about rental renewal, they don't give you heart attack rates. Certain landlords will up rates by 30 to 40 per cent, and you have to ask how retailers can do a sustainable business like that."

The slow leasing activity exerted downward pressure on rents, which fell 1.9 per cent in the first quarter, following a 1.3 per cent drop in the previous three months, URA data showed.

Consultancy JLL expects retail rents to contract by about 7 per cent to 8 per cent this year, in anticipation that some landlords may have to offer greater discounts to maintain stable occupancy.

Analysts say other challenges such as the manpower crunch are likely to persist for the rest of the year. Colliers International noted, however, that falling rents in the central area are an opportunity for some brands to open new flagship stores and strengthen their presence.

http://www.straitstimes.com/business/shopping-mall-vacancies-in-town-highest-in-5-years
 

zhihau

Super Moderator
SuperMod
Asset
If cannot huat, have to either loot or hoot!!! :biggrin:

I was looking at Katong i12 and the changes in the retail stores in there over the years. The number of stores that started out on its opening and surviving today can be very telling of our retail scene.
 

mojito

Alfrescian
Loyal
I was looking at Katong i12 and the changes in the retail stores in there over the years. The number of stores that started out on its opening and surviving today can be very telling of our retail scene.

As the saying goes, there is a sucker born every minute.
 

congo9

Alfrescian
Loyal
Someone at the very top think that by importing Phinoy wholesale can solve the problem of shortage and the weakness of retail industry as a whole.
 

JohnTan

Alfrescian (InfP)
Generous Asset
Maybe I should dump my CapitaLand Mall Trust shares. Retail reits look like they are not going to do well for this year.
 

johnny333

Alfrescian (Inf)
Asset
I find it strange that they are closing Funan to do major renovations:confused:

The problem seems to be with high rentals & after they do the renovations. I bet the rentals are going to go up & not down. So no matter what new stores they decide to populate Funan with, it will suffer the same fate as the rest of the retail industry in Spore.
 

JHolmesJr

Alfrescian
Loyal
Inflating the population to ridiculous levels, promoting false optimism by equating new consumers with greater volume of business.

When majority of the increased residents are, in reality, the farking dormitory or shared accomodation type who cant afford any of the shit sold in these malls.

Plus greedy landlords who have indirectly contributed to the rise and rise of online shopping.

Time to sell, John Tan
 

glockman

Old Fart
Asset
Unless you own the retail space you are operating from, you are just working for the landlord. These greedy landlords need to recoup their investments because they probably paid too much to the greedy developer. Screw them all, go online.
 

SeeFartLoong

Alfrescian
Loyal
Not yet ok.

You wait just further 9 months, you should see a 50 year's worst, amd then persistently last for many years. Then you will know what's real Jialat. Now hor, not yet ok baby?
 

krafty

Alfrescian (Inf)
Asset
sinkie landlords are very greedy, it's time retailers bow out together and let them eat grass.
 

JohnTan

Alfrescian (InfP)
Generous Asset
I find it strange that they are closing Funan to do major renovations:confused:

The problem seems to be with high rentals & after they do the renovations. I bet the rentals are going to go up & not down. So no matter what new stores they decide to populate Funan with, it will suffer the same fate as the rest of the retail industry in Spore.

If rents can't be raised after doing renovations, then it defeats the purpose of doing renovations in the first place. The crux of the problem is that there is not enough people in Singapore to support so many malls. Either we shut down some malls, or we support the national plan to up our population to 6.9 million.
 

congo9

Alfrescian
Loyal
Raising the rental is so easy. You should be trying other method like Making the retailers to do their own renovation and make up. You should not be interfering with their profits.
 

JohnTan

Alfrescian (InfP)
Generous Asset
Raising the rental is so easy. You should be trying other method like Making the retailers to do their own renovation and make up. You should not be interfering with their profits.

I thought landlords were motivating tenants to work harder and be more creative by charging them a low base rental + percentage of sales for monthly rent.

There was also a creative move by some food court master tenant / landlord, where the landlord would take the entire daily sales and at the end of the month, refund the difference back to the hawkers after deducting rent and fees for dishwashing and cleaning.
 

scroobal

Alfrescian
Loyal
Good point. GCT began this policy where the influx of foreigners would fuel domestic consumption and thus the GDP. It worked for a while but to your point how many can consume good sold in these malls. Viswa Sadasivam in his maiden speech as NMP commented on this and showed a comparison with HK and it was pretty glaring.

Mall development is one thing, getting the proper tenants mix that will draw the crowd is another. Westfields is one of the most successful mall operators in the World and they have made it a science in the field of tenant mix. For their pains they take a % of sales revenue from every tenant.

The REIT has now become a mechanism to screw the population. The mall operators now have the management fees as steady income in good and bad times and general public that have shares in REIT have no clue what they have gotten into. MapleTree which belongs to Temasek only knows how to make gains on the back of locals but not overseas.

Inflating the population to ridiculous levels, promoting false optimism by equating new consumers with greater volume of business.

When majority of the increased residents are, in reality, the farking dormitory or shared accomodation type who cant afford any of the shit sold in these malls.

Plus greedy landlords who have indirectly contributed to the rise and rise of online shopping.

Time to sell, John Tan
 

zhihau

Super Moderator
SuperMod
Asset
Good point. GCT began this policy where the influx of foreigners would fuel domestic consumption and thus the GDP.

For a moment I thought the PAP government was showing care and concern for her citizens by building more malls. Seriously, got to admit these malls provide some respite from that terrible heat. Can I suggest these malls retrofit some air filters as well? You know? Haze coming back? Yah.
 
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