Orchard Road feels the heat

Whether it is Jurong, Sengkang or Woodlands, the future is in the suburbs, say major retailers, who are moving quickly to secure prime suburban shop space.

Japanese retailer Francfranc, which made its South-east Asia debut here in May, chose to open its first outlet at JCube in Jurong East.

Luxury watch store Cortina opened its first outlet outside the Orchard Road and Marina Bay precincts at 112 Katong last year; and Swedish retail giant H&M's third local store will open in Jurong East's Jem next year.

Wing Tai Retail has 136 stores here across 16 brands including G2000, Topshop and Dorothy Perkins. Currently, 51 per cent of the outlets are city stores - down from 70 per cent a decade ago.

The group's high-end brands like Karen Millen, however, are still available only in the city for now. It says its Dorothy Perkins and Topshop outlets in the suburbs still ring in only 60per cent of the sales at a similar-sized outlet in the city. But this is expected to change.

"The Government is developing these regional hubs, where people live, study and play. We expect these shopping hubs to grow and we want to be there for that," says Wing Tai Retail executive director Helen Khoo.

Mall developers have been eager to ride on this momentum.

Last year, at least five major suburban malls - 112 Katong, Changi City Point, Junction 10, Rochester Mall and Alexandra Retail Centre - opened in the suburbs.

More malls are being planned or constructed in areas like Jurong East, Sengkang and Paya Lebar.

In contrast, the Scotts Square project was the only Orchard Road retail property that opened its doors last year and the only new mall for the foreseeable future is Orchard Gateway at Somerset.

Retailers' enthusiasm for the suburbs has translated to higher rents, despite the influx of mall space.

According to property consultancy CBRE, prime suburban rents remained at an all-time high in the third quarter of this year at $29.75 per sq ft. Orchard Road rents stood at $31.60 psf, down from their peak of $36.76 psf in the third quarter of 2009.

In the first quarter of last year, the rental gap between prime Orchard Road retail space and top suburban locations narrowed to $1 - the lowest level on record.

Five years ago, the gap hovered around $7.

Industry players and analysts think this points to a natural evolution in the Singapore retail scene.

Frasers Centrepoint Trust's top performing mall in terms of shopper traffic is NorthPoint in Yishun, with an average 3.4 million visitors monthly. Its $72million renovation of Causeway Point in Woodlands is in the final stages.

"Malls in the suburbs really offer the convenience factor," said its spokesman. "We find that shoppers visit our suburban malls regularly. They take their meals there and drop off their children there after school.

"Orchard Road, on the other hand, is becoming more like a destination, not a place people visit every day."

At CapitaMall Trust malls, shopper traffic last year was higher at Junction 8 (28 million) and Tampines Mall (27.4 million), than at Clarke Quay (12.6 million) and Plaza Singapura (23.3 million).

"Orchard Road used to boast of the most modern malls, but now we find the same hardware in suburban areas. MRT stations also make suburban malls much more accessible," said Dr Lynda Wee, adjunct associate professor in retailing at Nanyang Technological University's Nanyang Business School.

Proximity to homes and access via MRT have helped most suburban malls surmount parking problems, which have plagued most of them since their opening.

Source: The Straits Times –21 December 2012