Suburban Malls Can Command Rentals Close To Prime Locations: Analysts

Source : Channel NewsAsia, 17 Aug 2007

Captive shoppers in heartlands - like Jurong, Woodlands, and Tampines - are catching the eye of retailers.

And analysts say that is why some suburban malls can even command rentals similar to some prime downtown locations.

Some of Singapore’s heartland malls have been as big a hit with shoppers as their more upscale cousins in Orchard or the Raffles City area.

AMK Hub in Ang Mo Kio is the latest heartland mall on the block - following others such as Causeway Point in Woodlands and Jurong Point.

Food and beverage players at AMK Hub say the key is to choose areas with offices or government services so that the lunchtime crowd can help boost sales.

Mok Yip Peng, Managing Director, Soup Restaurant Group, says: “Our lunch crowd is made up of administration staff and executives from industrial parks and offices nearby while dinner is made up of families and newly-wed couples. The rental costs in downtown locations are slightly more expensive. The key benefit is that lunchtime crowd is guaranteed. As for dinner and weekend crowds, it’s about the same for both downtown and suburban locations.”

Besides offering dining options to working professionals, mall operators say crowds flock to heartland malls for the easy access to services and generally cheaper goods.

Peter Seetoh, Executive Director, Knight Frank Shopping Centre Management, says: “Convenience is a big factor because they can get what they need on a daily basis. But if they need something more in the higher fashion end, they’ll probably need to go downtown. The price points in the heartland malls are also more competitive from S$50 to about S$100 price range.”

However, rental costs for malls in the heartlands are not always cheaper.

It is estimated that the rental cost for shops in the basement AMK Hub works out to be about S$15 per square foot.

Property analysts say this is comparable to locations like Suntec City.

Orchard Road rents go for an average of S$20 per square foot.

And analysts say the higher rents in the heartlands can often be justified.

Daisy Loo, Retail Director, Jones Lang LaSalle, says: “Retailers do favour them, particular ones, because they have these captive shoppers group, which is their demand for goods and services is less fluctuating, more consistent. And also, they are less susceptible or less vulnerable to economic fluctuations, economic conditions or tourist arrivals.”

Jones Lang LaSalle research shows rents for malls in the heartlands dipped only 3 per cent during the the Asian economic crisis in 1997.

This compared to a 27 per cent fall in the Orchard Road belt and a 20 per cent decline in other downtown areas like Marina Bay. - CNA/ch