Singapore 25 May 2017 – The F&B sector continued to account for the bulk of demand for space in Singapore’s prime retail market in the first three months of 2017. More F&B groups are shifting away from shopping centres and are exploring alternative locations such as shophouses, office buildings and industrial buildings. Mid-range restaurants are performing particularly well at present. For example, new dining concepts which opened or are opening in Q2 2017 include Greek deli and café ERGON, and Niku Kappo and Omotesando Koffee from Japan.
Letty Lee, Executive Director, Retail Services, CBRE said “The demand for F&B spaces is on the rise islandwide. More landlords are incorporating such spaces as they generate activity within malls to draw crowds. We recently saw the opening of Downtown Gallery in the CBD, which has interesting concepts such as a social kitchen. Indeed, as workplace trends evolve and the pool of millennials working in the CBD expands, there is tremendous opportunity for F&B operators to experiment with different formats. These include ramping up with a heavy dose of technology, the use of apps that consumers working around the area can rely on to order their F&B and choose to collect on the go, or enjoy them at the mall. It should be noted though that retailers in the CBD are mindful it is a five-and-a-half-day trading business.”
The F&B trends in Singapore are in line with the findings of CBRE’s 10th edition of “How Global is the Business of Retail” which polled retailers on the international markets they entered in the past year. Coffee and restaurants was the only sector that expanded across all the regions of APAC, EMEA and the Americas. 24 of 46 new entrants into Singapore, or slightly over half, comprised F&B operators.
Other key drivers are gyms and sporting goods retailers, who are performing strongly and are expanding their online presence. In the first half of this year, Fitness First set up another outlet at Bugis Junction while Virgin Active opened another outlet in Raffles Holland V mall. Among retailers, Australian activewear brand Lorna Jane opened its first store in Singapore in Ann Siang Hill and PUMA Forever Faster 2 opened a store at Bugis+. Demand from fast fashion brands was limited with most groups cautious about expanding, largely because of labour shortage and rising operational costs. Luxury groups recorded limited movement, confined mainly to Marina Bay Sands which offers larger floor plates.
Desmond Sim, Head, CBRE Research, Singapore and South East Asia said “As a short term remedy to shore up occupancy, landlords are open to pop up stores to fill space and channel foot traffic. Some retailers are opening such stores for 12 months with the flexibility to expand if they perform well. The traditional concept of anchor tenants taking up large formats is rapidly evolving. In a climate where consumers flit between the online and offline effortlessly, where value and speed of gratification are the key factors; landlords are presented with tremendous potential to curate shopping spaces to create experiences for the consumer”.
Average prime retail rents as compiled by CBRE stood at $25.30 at the end of the first quarter, the ninth straight quarter of decrease and 2.7 per cent below values a year ago.