A LIMITED supply of new shop spaces is helping reverse a three-year decline in prime rents in Orchard Road, a property consultancy has found.

CB Richard Ellis (CBRE) found that rents for the three months to Sept 30 rose 5 per cent from the previous quarter to $31.60 per sq ft (psf) a month.

This is the first quarterly increase since the third quarter of 2008.

Ms Letty Lee, CBRE director of retail services, said Orchard Road malls are almost at full occupancy.

‘New-to-market brands continue to actively explore taking up Orchard Road space, encouraged by fresh opportunities offered by newly available large prime space, including the recent exit of Borders at Wheelock Properties,’ she said.

‘Rentals should hold steady for the fourth quarter.’

Prime shop rents have softened over the past few years as a flood of new shopping malls such as Ion Orchard, Orchard Central and 313@Somerset opened along the prime shopping belt.

But this has also led to retailers expecting greater visibility and accessibility for their stores now, Ms Lee said.

Older malls have revamped to stay relevant with new layouts and concepts.

The retail scene was also dominated by fast fashion brands in the third quarter, Ms Lee noted.

The entry of Forever 21, Cotton On and Uniqlo spurred two other fast fashion brands to chance their arm.

Aeropostale opened outlets in VivoCity and CityLink Mall as well as a 22,000 sq ft store in Ion Orchard.

H&M opened its 30,000 sq ft flagship store in Orchard Building, while Abercrombie & Fitch announced that its 21,000 sq ft shop in Knightsbridge will open in December.

Prime suburban rents increased by 2.9 per cent to $29.75 psf a month quarter-on-quarter, CBRE’s data found.

The fourth quarter will also give shoppers more options with the 45,000 sq ft Greenwich V in Seletar Road and the 207,000 sq ft JCube in Jurong expected to be completed.

The firm estimates that a further 657,000 sq ft of retail space will be completed next year while 1.57 million sq ft will enter the market in 2013.

Source: Straits Times, 5th Oct 2011