Rising vacancies and plunging rentals in shopping malls may be a headache for landlords, but it is not all bad news for retailers who have taken advantage of lower rentals to snag prime locations for their flagship stores.
More than 10 flagship stores were set up islandwide last year, noted property consultancy Cushman & Wakefield's research director Christine Li. This is the highest number since the global financial crisis in 2009, she said.
The last wave of flagship stores were set up between 2007 and 2009, when Orchard Road was undergoing a makeover.
Last year, cosmetics label MAC and Sephora opened flagships at Ion Orchard, while Japanese fashion retailer Uniqlo unveiled a three-storey store in Orchard Central. Other new flagships include those of watch brand Rolex at Marina Square and German leather goods brand Braun Buffel at Marina Bay Sands.
Ms Li said: "In the lower rent environment, 2016 saw a 'flight to quality' as retail brands that are still optimistic on expansion took this opportunity to upgrade to larger prime retail spaces vacated by previous tenants."
10 At least this number of flagship stores were set up islandwide last year. This is the highest number since the global financial crisis in 2009.
She said flagships are strategic, as they reinforce and enhance a brand's presence and status.
Uniqlo's founder Tadashi Yanai said the firm decided to open a flagship in Orchard Road as it sees Singapore as a gateway to not only the markets in South-east Asia but also in the Middle East and Africa.
"Despite the faltering retail climate in Singapore, Uniqlo's belief in the potential of this region is what has driven (our) decision to launch the three-storey Global Flagship store here," he said.
The islandwide vacancy rate for retail space was 7.5 per cent at the end of last year, up from 4.5 per cent at the end of 2013, Urban Redevelopment Authority (URA) data showed.
The climbing vacancy rate has, in turn, reduced rental rates. The median rental rate for retail space in the third quarter of last year was the lowest on record, falling to $9.82 per sq ft per month for the Orchard Road area - the first time it fell below $10, URA data showed.
Riding on the wave of soft rents, French sporting goods retailer Decathlon even secured a 15-year lease for a 35,000 sq ft outlet in Viva Business Park in Chai Chee, which opened in January last year.