Average rents for prime first-storey shops fell islandwide again in the last quarter to the lowest levels recorded in about nine years, according to a report out yesterday.
They slid 3.7 per cent quarter on quarter and 4.4 per cent year on year to about $30.90 per sq ft (psf) in the last quarter, said DTZ.
It is the lowest since the first quarter of 2006 and is mainly thanks to weaker consumer sentiment and slower retail sales, excluding online sales, it added.
According to the Nielsen Consumer Confidence Index, for example, consumer confidence here fell 1 per cent quarter on quarter in the second quarter. The Department of Statistics' Retail Sales Index for July saw declines across mini-marts and convenience stores, food and beverages, and clothing and footwear. DTZ said: "This indicates greater caution in household expenditure, which will in turn impact retail sales."
Rents in the other city areas, including retail spaces in Marina Centre, City Hall and the Central Business District, fell the most - by 4.5 per cent quarter on quarter to about $22.10 psf last quarter.
But average prime first-storey rents in Orchard and Scotts Road were down by a smaller percentage of 3.5 per cent quarter on quarter to $38.45 psf. Rents in the area were more resilient as the area remains highly sought after by international brands, DTZ noted.
Prime first-storey monthly rents in the suburbs fell 3.5 per cent quarter on quarter to $32.10 psf in the last quarter.
Based on the Urban Redevelopment Authority's second-quarter figures, islandwide occupancy rate for retail space fell by 0.4 percentage points to 91.8 per cent, with moderation seen in all three areas - Orchard and Scotts Road, other city areas and the suburbs.
Dr Lee Nai Jia, DTZ's associate director of research, said occupancy rate should come down further, with the decline most felt in other city areas, especially the older strata-titled malls.
Suburban malls should see competition for tenants heating up, with most of the retail supply this year, or about 836,000 sq ft, coming up in the suburbs - including at Waterway Point and Technopark@Chai Chee.