Source : Today 7th Sep 2009
MORE than half of the 86 retail tenants at Shaw Centre have moved out since early this year as the mall appears to be a casualty of the supply glut of retail space downtown. Tenants that Today spoke to say an exodus of retailers has led to a significant drop in foot traffic for Shaw Centre. “It looks eerie in the evenings,” said a shop assistant whose employer is among a dwindling number of businesses still operating in the five-storey retail mall along Scotts Road. For others, it is understood that the landlord Shaw Foundation had wanted to double their rents when their leases came up for renewal.
One former tenant, who had recently relocated, is understood to have been paying around $7 per square foot for her unit before the proposed renewal of her lease. Shaw Centre is owned by the Shaw Foundation and the rental revenue is distributed to charities. Shaw Centre’s management declined to comment when contacted by Today. Some retailers did say that the lack of clarity over whether the mall would be redeveloped soon was also a thorny issue.
They said there had been talk that Shaw Centre would be redeveloped or revamped to keep up with impending competition posed by newer malls, such as ION Orchard across the road, and others like Orchard Central, 313@Somerset and Knightsbridge further down Orchard Road. A retailer who declined to be named said, “I want to remain here because it is easier for my regular customers to return to my shop, and I don’t mind if I have to move out during the revamp. But now, I don’t even know if there is going to be one, and when it would happen. There is a lot of uncertainty. Some tenants are leaving even before their leases are up, citing poor business from the lack of traffic.
Tenants that have left are understood to have relocated to nearby malls like The Heeren, Far East Plaza, Far East Shopping Centre and Orchard Central. Mr Colin Tan, head of research and consultancy at Chesterton Suntec International, said landlords have to try to keep occupancy levels at a minimum of 90 per cent in malls. He saidL “When tenants leave, it is important for landlords to quickly find someone to fill the empty unit, or it can snowball if you don’t arrest that.” It is also critical to have the right retail mix or the mall may not be able to attract enough shoppers, he added. Shoppers have no lack of choices when it comes to malls along Orchard Road.
The arrival of three new mega-malls – Ion Orchard, Orchard Central and 313@Somerset – will add about 1.8 million sq ft of new retail space, bringing the total space available on Orchard Road to 8 million sq ft. This does not yet count the retail space that will be offered by the two upcoming integrated resorts. The supply of new retail space comes against the backdrop of a government survey of professional forecasters earlier this month, where 21 economists predicted a bigger 11.7-per-cent contraction in wholesale and retail trade for this year, compared to 11 per cent in the previous survey in the June survey. Mr Tan of Chesterton said while landlords in the Orchard Road area may not be cheering these trends, those that operate malls in the suburban areas, which cater mainly to locals, are seeing demand for space holding up relatively well
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