Recent retail consolidations and brand exits from Singapore have sparked concerns about the retail property market’s recovery amid economic slowdown caused by the global trade tariff conflict.
Despite these challenging operating conditions, the retail property market should remain resilient for several key reasons:
Retail consolidation creates opportunity to reconfigure space for higher rent
Retail consolidation is an integral part of business development to maximise profitability in an intensely competitive industry. Recent store closures, including anchor tenants such as BHG at Junction 8 and Cathay Cineplex at West Mall and JEM1, resulted from both structural and cyclical challenges.
The exit of these large-space occupiers offers an opportunity to reconfigure expansive areas into smaller units for specialty stores, potentially yielding higher rental rates. In 2022, Raffles City exemplified this strategy by transforming a large space vacated by an anchor tenant into smaller units, successfully leasing them to smaller-format and specialty retail brands.
Aligning malls with evolving shopper preferences and shifting market trends
Retail consolidation creates opportunities to meet evolving market trends by refreshing tenant mixes with new retail and F&B concepts in malls.
Shoppers increasingly emphasise having engaging experiences and fulfilling lifestyle needs. Landlords can curate replacement brands that drive foot traffic through in-store engagements.
Increasingly, brands ranging from fashion boutiques and department stores to car showrooms and bookstores set up a restaurant or a café within their spaces, creating a lifestyle destination, to enhance the overall shopping experience and drive foot traffic and spillover business to their core retail operations.
The growing emphasis on personal health, fitness and wellness could further drive growth in sports-related retail operations, riding on the rising demand for premium athleisure and sportswear.
Economic uncertainty and higher living costs present landlords with opportunities to incorporate more budget-friendly dining options in malls. Some F&B operations have closed their high-end dining concepts, pivoting instead to pocket-friendly dining operations.
Leveraging its competitive advantage and with landlords implementing proactive asset management strategies, Singapore’s retail property market will continue to innovate to changing market conditions.