The Straits Times | Apr 04, 2013
More than half of units are vacant; some blame speculative investors
Empty shop spaces greet shoppers at Thomson V, a mixed development in Upper Thomson.
Only 25 of the strata-titled development's 78 retail spaces were occupied yesterday, even though it opened in the middle of last year, a check by The Straits Times found.
Tenants spoke of dismal trade and poor traffic. So far, at least seven - including dessert shops My Garden Cafe and The Ice Shop, as well as salon Ez Cut - have shut.
The mall's developer, Macly Group, declined to comment. But property agents who rent out units to individual owners said their sizes range from 5 sq m to 104 sq m. The development now has an average unit size of 35 sq m, according to calculations by The Straits Times.
Market watchers said those buying them were predominantly investors, not retailers themselves. Some pointed to Thomson V as an example of how speculative snapping up of commercial spaces could lead to empty malls.
Last Tuesday, the Urban Redevelopment Authority (URA) introduced a minimum average size of 50 sq m for retail units in future developments, citing "a need to ensure a good range of retail units of different sizes to meet genuine retailers' space needs".
This came after it received more proposals for developments with a substantial portion of small retail units, said a URA spokesman.
Thomson V is believed to be one of the first to open in a string of new suburban developments offering large numbers of small retail units for sale.
Ms Mary Sai, Knight Frank's head of commercial sales, said retail investors typically hope for a net rental yield of about 4 per cent. "If they can't lease it out at a good rate, they are likely to keep it vacant so they have the flexibility to resell it easily," she said.
Mr Ong Kah Seng, director at R'ST Research, said investors snap up shoebox retail units as "each unit is more affordable", but the demand for small retail units in the suburbs remains fairly untested.
"Retailers must think the location is favourable," he added. "But such units are not in the city centre and there is no anchor tenant to draw in the crowds."
Retailers may also be less attracted to strata-titled malls - as opposed to those with a single owner - as there is no control over the mix of tenants.
"Mall developers sell the units to individuals, who rent them out to the highest bidder. There is no overall position for strata-titled malls," said Ms Sarah Lim, a senior retail lecturer at Singapore Polytechnic.
She pointed out that successful strata-titled malls with small units, such as Far East Plaza and Sim Lim Square, are centrally located and evolved over time, with market forces attracting similar trades.
In the meantime, retailers at Thomson V are struggling.
Miss Eris Seah, 23, who opened gift shop Eris' Collections in a 27 sq m unit in Basement 1 last December, pays a monthly rent of $3,000.
"So many spaces are empty," she said. "No one knows the mall is even here. The store serves four customers on a good day."
Organic skin care outlet Badger Balm's owner Terence Lim said he bought the 20 sq m unit in 2008 for about $650,000. "Speculators who have no intention of doing business here buy the units, push prices up and try to rent them out, but can't for whatever reason. They spoiled what could have been a nice mall."
Such owners are also in a bind. Mrs Maggie Lee, 50, bought a 24 sq m unit at Thomson V in July last year for $465,000. Since then, she has been trying in vain to rent it out at $2,500 a month. "It's a bit wasted. I must really try to rent it out now."
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