Large pools of residents a magnet for retailers during uncertain times
ORCHARD Road may have been voted the world’s top shopping street but suburban malls are keeping pace by drawing high-profile international brands as tenants.
Three new malls in particular – JCube and Jem in Jurong East and 112 Katong in East Coast Road – have bagged some choice businesses.
Next month, Japanese lifestyle retailer Francfranc will open its first store here - and marking its maiden entry into South-east Asia – in JCube.
Last week, Jem announced that it will house Swedish retail giant H&M’s second local store. Spanning three storeys, it will open next year.
112 Katong got the nod from high-end Danish furniture store Bo Concept when it decided to relocate from Devonshire Road. The mall is also where Cortina – which has downtown outlets – has branched out to, becoming the first luxury-watch retailer to have a presence in a suburban mall.
Its rivals in the luxury segment, like Sincere Fine Watches and The Hour Glass, have stores only in the city area.
These retail movements continue a trend which started in 2009 when Japanese casualwear giant Uniqlo chose to launch its first Singapore store at Tampines 1 mall.
Ms Letty Lee, director of retail at property consultancy CBRE, attributes the appeal of suburban malls to their large pools of regular customers living nearby.
She said: “Suburban malls have demonstrated their resilience during economic downturns and during times of low tourist numbers, such as the Sars period, and will therefore be attractive to retailers.”
Their drawing power has fuelled a rise in suburban-mall rents. According to CBRE, prime suburban rents were at an all-time high in the final quarter of last year at $29.75 per sq ft (psf).
Conversely, prime Orchard Road rents fell significantly from their peak of $36.76 psf in the third quarter of 2008 to $31.60 psf in the last quarter of last year.
In the final quarter of last year, the rental gap between prime Orchard Road retail space and top suburban locations narrowed to the lowest level on record.
Mr Ong Kah Seng, director of property consultancy R’ST Research, said that despite the high rents, retailers will continue to find suburban malls a magnet because of the uncertain economic climate and their proximity to residential areas.
“In the context of the economic slowdown, shoppers will be more frugal and consider spending on necessities before personal indulgences,” he said. The crowds will come because the retail mix in suburban malls is heavily tilted towards shops, eateries and supermarkets that are more wallet-friendly.
“As such, the rental prospects for suburban malls will be fairly good. City malls will still enjoy high patronage from lifestyle-discerning individuals but there may be more browsing than buying.”
And given the growing affluence of Singaporeans and the Government’s promotion of places like Jurong East as growth centres, the suburbs have the potential for retailers to go beyond familiar brands.
As Mr Jeremy Lim, chief operating officer of Cortina Watch, said of its Katong expansion: “The sizeable group of upper middle class in the suburban area leaves a niche for entry-priced luxury timepieces that is yet to be filled, so we see this as an opportunity to bring quality timepieces and accessories closer to our customers.”
But will shoppers one day see the likes of Gucci or Prada at a suburban mall? This has already happened in markets like Hong Kong. The Festival Walk mall in the upscale suburb of Kowloon Tong has brands like Chanel, Vivienne Westwood, Marc by Marc Jacobs and Alfred Dunhill.
Ms Sulian Tan-Wijaya, director of retail at Savills Singapore, does not expect to see that happening here any time soon.
“Suburban malls have certainly evolved and reflect Singapore’s growing affluence and the increasingly discerning tastes of the shoppers,” she said.
“But it’ll be a long time before you see a cluster of brands like Chanel, Louis Vuitton and Prada in a suburban mall. Suburban malls will never replace Orchard Road malls, which are where all the luxury shopping is.”
“Suburban malls have demonstrated their resilience during economic downturns and during times of low tourist numbers, such as during the Sars period, and will therefore be attractive to retailers.”
Ms Letty Lee, director of retail at property consultancy CBRE
Luxury brands and retail giants head to the suburbs
At JCube, in Jurong East
Japanese lifestyle retailer Francfranc will open its first store here. It is the 20-year-old brand’s first foray into South-east Asia.
At Jem, near Jurong East MRT station
Swedish retail giant H&M will be opening its second store here, adding to the one in Orchard.
Department store Robinsons’ first suburban store will be here.
At 112 Katong
High-end Danish furniture store Bo Concept is relocating from Devonshire Road.
Cortina becomes the first luxury watch retailer to have a presence in a suburban mall.
Marketplace, the gourmet supermarket by Cold Storage, also has its only suburban outlet here.