Thursday, April 9, 2009

New Malls Offer Rent Rebates To Get Tenants

Source : The Straits Times, April 9, 2009

Move is in contrast with landlords' refusal to do the same for older malls

ANOTHER new mall is going the tried-and-tested route of getting tenants: Cutting rents.

Orchard Central, slated to open in early June, has cut rents by 10 per cent to 30 per cent for some of its tenants on a 'case-by-case basis'.

When it opens in early June, Orchard Central will be the first new mall in Orchard Road in over 10 years. To attract tenants in this economic downturn, the 213,000 sq ft mall has cut rents by 10 per cent to 30 per cent on a "case-by-case" basis. -- ST PHOTO: SHAHRIYA YAHAYA

It becomes the latest new mall to do so; Ion Orchard last month announced that it would offer rental rebates of up to 30 per cent for stores that are ready for business by the time it throws its doors open in July.

The mall, located at Orchard MRT station, has achieved 80 per cent occupancy.

Orchard Central, which is at Somerset MRT station, currently has 65 per cent occupancy. It hopes to increase this by tweaking rents.

Other new malls which have offered rent cuts or rebates include Tampines 1 and Iluma, at Bugis.

Such moves have shown results.

Tampines 1, which waived rentals for the first month, has enticed 75 per cent of its tenants to open when it begins operations today.

Tenants at the new Iluma mall, which had its soft opening last month, said they were offered the same deal, on condition that they opened on March 28.

Iluma's developer, Jack Investment, did not respond to queries on its occupancy rate yesterday. But the mall looked to be about 60 per cent full when The Straits Times visited yesterday. Another 10 per cent of the units were also furnished and looked ready to open soon.

'It's a good incentive, especially with the economy not doing so well. We don't have to worry so much about costs for a while,' said Mr Raphael Lim, the sales and operations executive at Artisan Exchange, a men's boutique at Iluma.

Such moves are in contrast with landlords' stand on older buildings. Despite a push for blanket rent reductions led by the Singapore Retailers Association, mall owners are standing firm.

Even Far East Organization, which is building Orchard Central, has resisted offering cuts to more than a handful of tenants, usually those who signed leases when rents were at their peak, or those who hold big units. Ms Susan Leng, its director of retail management, said: 'It is not equitable to give across the board rental cuts.'

To date, she said, some 17 of its 123 tenants have asked for help, and fewer than 10 have received cuts, which will last till October. Other landlords like AsiaMalls have indicated that they prefer to spend on promotions and advertisements to draw traffic.

Small stores, however, are crying out for help. They say sales have dipped to such an extent that they need rent cuts to stay open. They threw the word 'inequitable' into the mix as well, saying promotions and the like favour bigger players.

Meanwhile, Orchard Central - the first new mall to hit Singapore's premier shopping strip in more than 10 years - is all set for a grand opening. It organised a media tour yesterday to show off its see-through glass facade and an air-conditioned shopping 'street' within.

Among its other attractions: Singapore's first indoor rock-climbing wall and $9 million worth of artwork scattered through the mall. The 213,000 sq ft mall will have 259 shops, mostly familiar names such as Osmose and Vincent Watch.

No comments: