Retail market could see more conversions to flexible workspace: analyst
Landlords may be pushed to explore leasing to flexible operators for a more stabilized occupancy.
Retail-to-flexible workspace conversions may pick up pace in the coming years, Colliers International said.
The firm mentioned a few notable deals in the recent quarters, including Spaces that took up 35,000 sq ft at One Raffles Place Shopping Mall in March, JustCo leasing 57,000 sq ft of retail space at Marina Square in late 2017.
“This is likely an adaptation to the tough retail leasing climate in Singapore,” the firm noted.
Retail vacancy stood at 7.3% in Q2, with about 4.8 million sq ft of vacant floor area in shopping centres and retail podiums island-wide, the Urban Redevelopment Authority (URA) revealed.
Separately, retail rents in the Central Region retail rents chalked up a long-running decline over the past 13 quarters, as of Q2 2018, the firm said.
Collectively, Colliers International thinks that said factors may have pushed landlords to explore leasing to flexible operators as the move could help them achieve a more stabilized occupancy for their retail properties.
“This is in spite of the trade-off being lower gross rental income, as office rents are typically lower than retail rents,” the firm explained.