SINGAPORE: More big retail malls are doing away with department stores as anchor tenants, to make way for smaller specialty shops.
Anchor tenants typically occupy a large space, give shopping centres an identity, and help draw in crowds with their reputation.
But they are now no longer seen as always essential.
In fact, specialty shops often afford to pay up to 50 percent more rent than department stores.
"Generally department stores in Singapore, they can produce sales in the order of $50 per square foot, all the way to $100. And that's considered very good if they can do that. As a specialty shop, they can generally produce $100 per square foot and above. Therefore, if a big tenant producing at $30-50 then you know that the space is not well utilized," said Pua Seck Guan, CEO of CapitaLand Retail.
Anchor tenants are far from obsolete though.
"There will still be a place for anchor tenants in shopping malls, especially the larger ones. Take for example one of the latest additions is VivoCity. There is a large amount of space and I think the developer will welcome any anchor tenant taking up long leases there. But for some of the smaller shopping malls where space is limited, like for example the upcoming Orchard Turn, it depends on the developers strategy. They may prefer to get mini-anchors, roughly taking up sizes of between 3,000 to 5,000 square feet rather than committing a significant proportion of the space to anchor tenants," said Nicolas Mak, Director of Consultancy and Research at Knight Frank Singapore.
Most shops here fall into the "small" range -- confirming the trend.
"From a return point of view you need to have about 40-60 percent of specialty stores to produce an optimum level of returns from an investment perspective. And it's a question mark whether to have one anchor or a mini-anchor plus some big anchor," said Pua.
On the consumer front, speciality shops are fast gaining popularity for their uniqueness and exclusivity.
And so, shops selling only one good, like bedsheets or lady's lingerie, now poses formidable challenges to department stores. - CNA /dt
|