Ion Orchard Offers Rent Rebates To Tenants

Source : The Business Times, March 24, 2009

The incentive, on top of tax rebate, to be offered from July mall opening till Oct

Tenants at upcoming Orchard Road mall Ion Orchard will get rebates of up to 30 per cent of base rentals - on top of the 40 per cent property tax rebate from the government that developer Orchard Turn Developments will pass on to all tenants - once the mall opens in July.

Getting ready for July: The mall has 80 per cent tenancy commitment and is in advanced negotiations for the remaining space

Citing the mall's opening in an 'unexpected economic climate', Orchard Turn Developments - which is owned by Singapore-listed CapitaLand and Hong Kong's Sun Hung Kai Properties - said that the rebates will be in place until the end of October.

Ion Orchard has to date secured 80 per cent tenancy commitment and is in advanced negotiations for the remaining space, it said in an update yesterday.

The amount of rebate each tenant gets will depend on a number of factors, such as when the tenant opens for business and whether he chooses to take part in certain Ion Orchard programmes.

BT understands that one of the aims of the financial incentive is to get as many tenants as possible to open for business on July 21 (when the mall will officially open) in order to up the 'wow' factor.

'As a committed long-term partner to our tenants we want to encourage them to work with us on our opening plans,' said Soon Su Lin, chief executive of Orchard Turn Developments.

'As such, we are collaborating with them on various strategies and mall-opening incentives to support their store opening programmes, including offering financial incentives of up to 30 per cent of their contracted base rental, and specially designed recruitment and training programmes to facilitate their staffing needs. This will be on top of the 40 per cent property tax rebate from the government that we will pass on to all tenants.'

Structural work on the mall, which has 640,000 square feet of shopping space, has been completed. The mall has also achieved its planned target retail mix of up to 60 per cent of the space leased to flagship stores, new-to-market brands and new concept stores, it said.

Market watchers pointed out that retailers at Ion will miss most of this year's Great Singapore Sale, which will run from May 29 to July 26.

Some said that this could hurt retailers, who will miss out on one of the busiest shopping periods of the year. But on the other hand, opening during 'sale season' is not good for retailers either, a market observer pointed out.

At the other end of Orchard Road, Far East Organization recently told BT that its upcoming mall Orchard Central is about 65 per cent leased.

Ion Orchard and Orchard Central, together with 313@Somerset, are the first three malls to open along Orchard Road in more than a decade.