Malls popping up all over the suburbs

Growing population, govt’s decentralisation plans driving surge

Malls rentals likely to hold firm despite surge in supply

Malls have been springing up all over the suburbs but shoppers continue to be hungry for more.

Experts say the Government's decentralisation plans and demand from a growing population are underpinning this surge.

Developers have also been encouraged by the success of suburban malls and are keen to open more.

Almost 1.2 million sq feet of retail space was added to the suburbs this year.

Earlier this month, the 220,000 sq ft Bedok Mall opened its doors while the 410,000 sq ft Westgate welcomed its first visitor.

The 584,000 sq ft Jem by Lend Lease was also added to the west's shopping scene, bringing the area's total retail space to about 2.4 million sq ft.

Despite losing its dazzle after a ceiling collapsed in September, Jem continues to be crowded with shoppers even on weekdays.

A further 956,000 sq ft of retail space is expected to be added to the suburbs by 2017.

Zooming in on the suburbs

Suburban malls have been able to thrive thanks to the Government's decentralisation strategy that started almost two decades ago, said CBRE retail services director Letty Lee.

Towns like Tampines, Woodlands and Jurong East were identified as growth areas that evolved into self-contained "regional centres" - a rich mix of offices and shops, entertainment places and hotels.

Ms Teresa Teow, CapitaMalls Asia's head of retail management, said the development of malls in these areas has helped to create a "critical mass" of retail options that collectively draws shoppers.

Mr Alan Cheong, research head of property agency Savills, added that demand from a captive residential audience for daily necessities has supported the growth of suburban malls.

The malls in the Jurong Gateway district, for example, serve an estimated one million visitors, including residents in the west, professionals and students, estimated CapitaMalls Asia, which owns three malls in the area.

Malls located next to major transport nodes can also draw crowds from farther afield, added Ms Lee. Ms Heidi Yong, Knight Frank Singapore's director and head of retail agency, said suburban malls are no longer places where people just do their errands. Instead, a plethora of entertainment, dining and service offerings have enabled shoppers to watch movies, dine and pick up groceries under one roof.

Ms Chia Siew Chuin, Colliers International director of research and advisory, added that anecdotal evidence has shown that monthly pedestrian traffic tends to be higher in suburban malls than those downtown.

Indeed, it is almost a sure bet that developers will be able to pull in crowds with a well-located suburban mall.

In the past year, they have bid aggressively for suburban commercial plots.

Frasers Centrepoint won a mixed-use site in Yishun in September with a stunning top bid of $1.48 billion, or $1,077 per sq ft (psf) per plot ratio (ppr).

This was a whopping 47 per cent more than the second-highest offer from a consortium, and miles ahead of the $750 psf ppr to $850 psf ppr that consultants had expected the site to fetch.

Thriving side by side

Towns designated as regional centres already seem to be crowded with malls.

In the Tampines regional centre, three malls - Tampines 1, Century Square and Tampines Mall - add up to about 910,000 sq ft of retail space.

Although these malls operate next to each other, consultants said differentiation is key for malls to thrive "symbiotically".

"Competing brands can be housed in adjacent malls, luring foot traffic from one mall to another in the process of making product comparisons," said Mr Cheong. Mall operators can also vary the proportion of anchor tenants and speciality retailers to liven up the mix, he added.

No oversupply

However, experts say that an oversupply of suburban retail space is not looming.

The populations of mature towns are expected to grow while new towns are still lacking big malls, said Ms Yong.

At least 1,900 new homes will be added to Tampines with the completion of projects like Q Bay Residences, Waterview and Arc at Tampines. In the new town of Punggol, the 370,000 sq ft Waterway Point - jointly developed by Frasers Centrepoint, Far East Organization and Sekisui House - is expected to be completed in 2015.

Elsewhere in the suburbs, The Seletar Mall in Sengkang West Avenue will add 188,000 sq ft of retail space by December next year, while the Hillion Mall in Jelebu Road is expected to open in 2015.

New malls will also stand in for mom-and-pop shops that have been absent in new towns, noted Ms Chia.

Ms Yong also noted the increasing affluence and sophistication of shoppers means there is room for more retail offerings with new concepts. Already, A-listers like Kate Spade Saturday and Armani Exchange have made their way to the suburban Westgate mall, while Malaysian leather goods brand Sembonia opened its flagship store at Bedok Mall.

Carving a niche

The emergence of new suburban malls means older, competing malls will have to reinvent themselves to stay in the competition, said Ms Yong.

One way is for mall operators to carve a niche for themselves.

The Velocity mall in Novena, for example, is home to sports retailers while the United Square mall nearby is targeted at families with young children.

Both malls have been in business for about 10 years.

Analysts still expect mall rentals to hold firm despite the surge in supply. CBRE data showed that average rents for prime suburban shop space were $29.80 psf a month in the third quarter - up 0.2 per cent from the same period a year ago.

"Retail rents in suburban malls are already quite high due to the attractiveness of such malls," said Ms Chia.

"Amid rising labour and other operation costs, existing and potential retail mall tenants are likely to resist any substantial rental increase, at least in the next 12 months or so."

Source: Straits Times 21th December 2013

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