Singapore’s office and industrial rents continue slide in Q2

Singapore’s office and industrial rents continue slide in Q2

By Mok Fei Fei, 938LIVE

SINGAPORE: Property consultancy DTZ said office and industrial rents here continued their downward trend in the second quarter this year.

For the office market, average monthly gross rents of prime offices in Raffles Place fell by 19 per cent to S$9.70 per square foot, compared to a 25 per cent fall in the previous quarter.

Office rents in the Central Business District (CBD) fringe and de-centralised areas suffered a larger fall compared to the previous quarter.

The rent in Beach Road and North Bridge Road slid by 20 per cent to S$6.20 per square foot per month, worse than the previous quarter’s 13 per cent fall.

With office rents – especially those in the CBD – falling substantially, the rental gap between those in the CBD and those outside has narrowed.

Office rents in Marina Centre were 14 per cent lower than those in Raffles Place, less than the 23 per cent gap recorded during the peak last year.

Turning to the industrial market, DTZ said average monthly gross rents fell by 6.8 per cent for first-storey private industrial space and by 8.1 per cent for upper-storey space. This is the largest rental contraction since the third quarter in 2003.

Due to the large supply overhang in the office and industrial markets, DTZ expects the two sectors to remain soft until 2011.

- CNA/so

Source : Channel Newsasia - 06 July 2009

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RSH to bring in new fashion brand

RSH to bring in new fashion brand

RSH Group is continuing to build up its presence in Orchard Road by booking space at the upcoming 313@Somerset mall and introducing a new fashion brand, called Bershka, to Singapore.

Chief operating officer Kesri Kapur said the group will set up a boutique in Ion Orchard for Bershka, a Spanish fashion brand owned by Inditex which created Zara and Massimo Dutti.

The shop will the first in South-east Asia selling the brand.

The Bershka boutique will take up 4,040 sq ft at the mall and will open late next month after the other RSH shops in the complex open.

It will increase RSH’s footprint in Ion Orchard to 44,000 sq ft, making it the largest fashion tenant in the mall. Its other shops at Ion include Zara, Sephora, Pull and Bear, Mango, Massimo Dutti and Bebe.

Singapore-listed RSH is also taking up 26,170 sq ft at 313@Somerset, with 11,750 sq ft of that set aside for Zara.

Its other shops at 313@Somerset will be for Mango, Lacoste, Puma and Royal Sporting House and Golf House.

Source : Business Times - 06 July 2009

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Mall rents down? Not for lease renewals

Mall rents down? Not for lease renewals
Existing complexes still ask for higher renewal rates, says retail giant
By Joyce Teo

Property experts said the rental declines would be more evident in malls that still have space to lease, including new complexes in the Orchard strip and nearby existing malls that may have lost some tenants to the recent arrivals.

THE new malls taking shape in Singapore are offering lower rents to lure tenants in trying times but existing complexes are demanding higher renewal rates, said a senior executive of retail giant RSH Group.

Chief operating officer Kesri Kapur pointed to a paradox in the local market: Most retailers are grappling with falling profits, yet most lease renewals are done at higher levels.

One suburban mall is even asking RSH for 20per cent more to renew the lease of a shop of less than 3,000 sq ft.

‘We are moving out of that particular location. Obviously, business is not what we would have expected when we signed the lease,’ said Mr Kapur.

‘This is one example where we have taken a decision… There are a couple of other locations that we are reviewing.’

Mr Kapur conceded that landlords may have lowered their expectations of how much more they might get in rent renewals, but they are still renewing leases at a higher level.

‘Whenever we renew rents in Orchard Road, the rents have not declined,’ he said. ‘For the newer malls, for those who have not signed before December, their offers would probably be better.’

A typical retail lease lasts three years so a higher rent now means one above the level committed three years ago.

Retail rents have indeed fallen from the peak rates of last year, but they may not all have dropped to levels done three years ago.

According to consultancy DTZ, rents of prime retail space in Orchard Road, Scotts Road and other city areas have fallen by more than 6per cent from last year’s peak and are close to 2006 levels.

But suburban rents have fallen by only 2.1per cent and are at 2007 levels.

Property experts said the rental declines would be more evident in malls that still have space to lease.

These include new complexes, such as those in the Orchard strip, as well as nearby existing malls that may have lost some tenants to the recent arrivals.

DTZ’s associate director of retail, Ms Anna Lee, said in a report on Friday that many retailers and food and beverage (F&B) operators have delayed expansion plans or changed their business strategies under the pressure of the economic downturn.

‘Some F&B operators have or are considering moving to business parks, where rents are much lower and the worker catchment is considerable,’ she said.

More retailers are also feeling the pressure of having to move out of unprofitable locations, said an industry source.

The Singapore Retailers Association had earlier called for landlords to lower rents, saying many firms will go under if something is not done.

Executive director Lau Chuen Wei said the association started its ‘crusade’ to highlight to landlords that their high rents may cause the closure of some retail stores - and cost retail jobs.

They have since seen indications that some landlords are more open to exploring creative ways of collaboration, though most would not reduce rents.

‘However, we also hear that new sign-ups have seen more success in achieving rents that are lower than initially offered,’ she said.

Mr Kapur said he anticipates consumer demand to be challenging in the next 12 to 18 months.

‘Everybody is facing challenges now. What is important is whether you can hold hands and work together.’

RSH to bring in new fashion brand
RSH Group is continuing to build up its presence in Orchard Road by booking space at the upcoming 313@Somerset mall and introducing a new fashion brand, called Bershka, to Singapore.

Chief operating officer Kesri Kapur said the group will set up a boutique in Ion Orchard for Bershka, a Spanish fashion brand owned by Inditex which created Zara and Massimo Dutti.

The shop will the first in South-east Asia selling the brand.

The Bershka boutique will take up 4,040 sq ft at the mall and will open late next month after the other RSH shops in the complex open.

It will increase RSH’s footprint in Ion Orchard to 44,000 sq ft, making it the largest fashion tenant in the mall. Its other shops at Ion include Zara, Sephora, Pull and Bear, Mango, Massimo Dutti and Bebe.

Singapore-listed RSH is also taking up 26,170 sq ft at 313@Somerset, with 11,750 sq ft of that set aside for Zara.

Its other shops at 313@Somerset will be for Mango, Lacoste, Puma and Royal Sporting House and Golf House.

JOYCE TEO

Source : Straits Times - 06 July 2009

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Go small - to get residents involved

Go small - to get residents involved

That’s one way to get more people to take part in managing their estates

By Aaron Low

ONE of the most irksome things neighbours can do to you is to leave bags of rotting trash lying in common areas.

It is something I experience quite often, living in a Housing Board block which has rubbish chutes located along common corridors. Based on what gets dumped at this common area, it is easy to guess what my neighbours had for dinner.

Last weekend, for instance, a family had chicken rice and hokkien noodles. They also had durians and dozens of mangosteens for dessert. The rotting food was left in the open for all to see, instead of being wrapped in trash bags and chucked into the chute.

Such a lack of civic-mindedness is a result of the missing link between HDB residents and town councils, which Senior Minister Goh Chok Tong spoke about in an interview with The Straits Times last week.

Mr Goh lamented that while town councils have worked thus far in maintaining common areas in HDB estates, the connection between councils and residents remains weak.

This has been a major shortcoming of the 20-year town council project. One of the key objectives in having councils was that residents would take on more responsibility and a greater interest in the running of their estates.

But many still do not care. Trash left in common areas and vandalism are found in many housing estates like mine.

Such indifference towards one’s surroundings is even more stark when one compares public housing to private estates, such as condominiums. There, residents take a much greater interest in how their estate is managed.

This is no doubt because dirty corridors would increase their monthly conservancy charges. Residents also know the effect that poor maintenance can ultimately have on the value of their property.

Hence, it is a real pity that the majority of HDB dwellers continue to remain disengaged from their town councils.

For one thing, a community of engaged residents would mean that people treated their estates with more care.

For another, the councils represent the closest thing there is to local government. They provide residents with the opportunity to manage their physical living environment.

Such involvement in town councils, if undertaken successfully, can enrich grassroots democracy and raise political engagement among residents, albeit on a small scale.

So why do residents continue to be switched off, and what can be done to raise their level of interest?

The law already stipulates that at least two-thirds of councillors have to live within the same estate. Yet residents are not stepping forward. Why is this so?

One hurdle may be due to the perception that town councils are politically partisan.

Town councils were created with the deliberate aim of getting residents to recognise that there is a clear link between their vote and the estate they live in. The law mandates that the elected MP heads the relevant town council.

While residents are comfortable voting for the MP and party of their choice in the confines of the polling booth, some may have reservations working with MPs in town councils, for fear of being seen as members or supporters of a party.

This could explain why a proposal by opposition politician and Potong Pasir MP Chiam See Tong in 1988 to hold elections for council posts in his constituency failed to take off.

Despite sending invitations to 19,000 residents, just six responded. Most town councils have between 25 and 35 councillors for each estate. Mr Chiam ended up appointing his entire town council.

Apart from the political factor, another reason for residents’ lack of involvement could be sheer apathy: They prefer to pay the fees, and let someone else take responsibility for running the estate.

Most estates are kept spick and span by a small army of cleaners who sweep floors, wash corridors and clear drains. No wonder many do not see a need to invest more time and resources, abiding by the old adage: if it ain’t broke, why fix it?

On the flipside, many town councils themselves appear closed off to the involvement of residents, other than those who are already grassroots leaders.

Yes, town councils do reach out to residents, polling them on the colour schemes for their blocks, and sending out monthly newsletters.

But if councils are meant to be a form of local government by residents and for residents, more needs to be done to involve them directly, for example by explicitly inviting residents to sign up to be councillors. I have yet to see such notices, whether on notice boards or town council websites.

For those keen to serve, councils might, in fact, be seen to be signalling that they are not open to accepting them.

Managing and maintaining an estate is a serious undertaking. It ensures the well-being of thousands of residents, and involves millions in fees paid by them. Hence, professionally qualified individuals are usually a first choice. They are likely to be people the MP knows personally as competent and trustworthy.

But this should not preclude the involvement of those from the wider community of residents.

One way to involve a wider cross-section of town residents is for town councils to form smaller committees to focus on specific areas of interest.

There could be a group looking at how to make an estate more elderly-friendly; or a group to study how best to make use of open spaces.

Such groups would involve many more residents in the work of a council and expose them to the work of the council so that in time, some may be suitable to become councillors.

Town councils can find diverse ways to give people the opportunity to have more of a say in how their estates should look and operate.

Doing so would hopefully see residents come forward, not just to take greater responsibility for the maintenance of their estates, but to claim ownership of the environment in which they live.

Source : Straits Times - 06 July 2009

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