Despite the continuous decline in retail sales and with new supply carrying out soon, Orchard Road retail rents are still rising. However, Cushman and Wakefield stated that advantageous retailers coming in the last phases of negotiations for the remaining limited preference in the new mall’s ground-floor spots have maintained the demand for principal retail space firm in the initial six weeks of the second quarter.
In the six weeks between the end of first quarter of 2009 and sometime mid of second quarter, Orchard Road’s average rental value for principal ground-floor retail space for every month went down to 1.1 percent, seemingly lower than the 4.6 percent quarter-on-quarter tightening evident in the first quarter of 2009.
Cushman’s associate director of retail consulting and leasing, Turner Canning, believed, “Demand for retail space fell into a state of paralysis in Q4 2008 and early 2009 as the global economy was clouded under the tint of uncertainty. However, retailers have now moved into a state of acceptance and we are seeing more leases under negotiation.”
If Orchard Road retail space, according to Cushman’s average monthly leasing rate for primary ground floor space, was at $36.50 per sq ft (psf), as of 15 May 2009, down by 1.1 percent from $36.90 per square foot as of March .There has been a 5.7 percent fall from end of 2008 to second quarter of 2009.
In addition, Ang Choon Beng, director of research in Cushman, said, “while there is short-term resilience in prime retail rents, our forecast calls for a decline of a further 5-10 per cent in Orchard prime ground floor retail rentals through to the end of the year because of the generally weak retail outlook.”
Mandarin Gallery, Orchard Central, ION Orchard, and 313@Somerset are the recently constructed malls that will append a total of 1.8 million sq ft net retail space in the principal Orchard Road shopping belt in Singapore, starting now up to mid-2010, an enormous increase of 40 percent from the 4.5 million square feet present stock.