Saturday, September 1, 2012

Suntec REIT "in no rush" to lease out Carrefour's space


SINGAPORE: Suntec Real Estate Investment Trust told Channel NewsAsia that it is in no rush to lease out space which will be vacated by Carrefour at Suntec City.

Suntec REIT which owns the shopping mall said that's because the area will be undergoing a major revamp in early 2013.

Carrefour hypermarket will be checking out of Suntec City by year-end.

It currently occupies about 140,000 square feet of net lettable space at the mall and Suntec REIT said there's no hurry to sign on new tenants when Carrefour leaves.

Suntec City is undergoing a S$410 million revamp.

The trust said areas occupied by Carrefour, the Rock Auditorium, Eng Wah cinemas and NUSS Clubhouse will also be vacated early next year to make way for new entertainment and lifestyle offerings, including a new cineplex.

Phase Two of the renovation works is expected to be completed by end-2013.

Analysts said Suntec City should play to its strengths in its efforts to remake itself.

Chua Yang Liang, head of Research, South East Asia, Jones Lang LaSalle, said: "Your working day population in the area, what are their needs? I think that is usually almost a forgotten catchment."

Experts added that the landlord could also divide the large premises into smaller units to enjoy higher rentals.

Nicholas Mak, executive director, SLP International Property Consultants, said: "However, the downside is that they now have many tenants to manage and there is also a vacancy risk.

"On the other hand, they could rent out the entire space to one or two anchor tenants. The rental that they are going to get on a per square foot basis will be lower, but they will not need to carve out the space and lose some space to corridors or circulation area."

Market watchers said nearly two million square feet of new retail space will come on stream in Singapore next year, with the majority of them located in suburban areas.

And they will put some pressure on older malls which may need a facelift in order to stay competitive.

Overall, analysts expect the retail sector to remain fairly stable this year, with rentals seeing a marginal decline of about 1 to 2 per cent on average.

As of the end of the second quarter, vacancy rate for retail properties island-wide stood at around 5 per cent.


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