Who will fill the prime real estate left behind by Robinsons?

WITH two substantial plots of prime real estate to be vacated when Robinsons Singapore exits, The Heeren and Raffles City Shopping Centre's landlords could divide the plots into smaller ones, rather than wait for a major tenant to take over the vast spaces, real estate observers have said.

Robinsons occupies a roughly 85,000 sq ft space, spanning three floors, at Raffles City. Its flagship at The Heeren takes up 186,000 sq ft of space, over six floors. Both are prime, street-facing retail shop fronts along Stamford Road and Orchard Road respectively, and are hard to come by, noted Ethan Hsu, head of retail at Knight Frank Singapore.

But the plots are also expensive to rent. Even though prime retail rents fell across the board in the third quarter of this year, Christine Li, head of research for Singapore and South-east Asia at Cushman & Wakefield, noted that the average rent for the area around Raffles City is S$20.25 per square foot (psf) per month. In the Orchard area, where The Heeren is located, the average rent works out to S$33.73 psf per month.

The size and capital outlay required for the spaces may thus limit their demand in the current Covid-19 crisis. JLL Singapore's senior director of retail Lee Siew Ling said that the spaces are "unlikely to be absorbed readily" by a single tenant or concept in the current market.

"Co-working space operators would have been strong contenders due to the rising interest and growing number of operators 12-18 months ago," she added. "However, the large size of space and capital investment required for fit-out may pose a challenge for some, therefore demand may be limited now."

The operating conditions for retailers also remain challenging, with footfall at malls yet to recover to pre-pandemic levels and the implementation of social distancing. "Large format stores may be under pressure," said Desmond Sim, CBRE's head of research for South-east Asia. "It's not wise to sit and wait for a like-for-like tenant to fill the space."

NUS Business School associate professor Lawrence Loh added that large, premium brands would be needed to maintain the image of those malls. However, the usual "blockbuster" retail names such as H&M and Isetan are already facing challenges on their own, and rapidly growing brands like Don Don Donki may not fit the image, he said.

Recent notable retail openings have included Apple's store at Marina Bay Sands and Decathlon at The Centrepoint (incidentally, replacing department store Metro).

Alix Goursat, business development director of Decathlon Singapore, said that the retailer's expansion strategy is driven by the ability to create an experience and convenience for customers. This is also as Decathlon adopts an omnichannel strategy in Singapore, meaning that the physical stores complement the online business.

Hence, "location is very important to us", Ms Goursat said. "In order to develop experiential concept stores, the location should be large enough - more than 35,000 sq ft, and located in a high traffic area, next to transportation hubs for example, for convenience and easy accessibility."

Robinsons' last two stores are "definitely in prime locations", she noted.

Ikea said that it is committed to opening its third store in Singapore at Jem shopping centre in Jurong in 2021, and is currently not looking for further lease space. The space at Jem was previously occupied by Robinsons until it moved out this year.

Apple and co-working space operator JustCo separately said they were unable to comment.

A better alternative may be to split the retail plots at Raffles City and The Heeren into smaller ones, the analysts said. Doing so could not only achieve higher rents psf, but also make it more feasible for brands to lease.

Mr Hsu said Knight Frank has received "some interest" from overseas lifestyle retailers to start a flagship store in Singapore, as well as from established lifestyle and entertainment operators looking to start new concepts aimed at "a new breed of shoppers" post-Covid.

Cushman & Wakefield's Ms Li noted that the athleisure trend is "booming", with Foot Locker opening its sixth and largest store yet, spanning 23,000 sq ft, at Orchard Gateway @ Emerald.

Amid the uptick in e-commerce, online retailers may also pursue a "clicks to bricks" strategy and open physical stores to gain more sales and brand recognition, she added, pointing to Love, Bonito's recently opened 4,300 sq ft store at VivoCity.

The exit of an anchor tenant, while unfortunate, could be an opportunity for the landlords to rethink the positioning of the malls. This is especially so for The Heeren, where the proportion of space taken up by Robinsons gives it a bigger chance to rejig its theme, said Mr Sim of CBRE.

The mall's last major revamp was around seven years ago, when Robinsons moved in as the anchor tenant. And in the years before that, two anchor tenants, record shop HMV and F&B operator Marche, had exited. They left behind a hodgepodge of brands like Swatch and Spinelli Coffee, which eventually moved out as well. Now, aside from Robinsons, there are only a few tenants, like Luke's Oyster Bar & Chop House and Tsui Wah.

Swee Cheng Management, which operates The Heeren, said it is still in talks with Robinsons' provisional liquidators. "We are currently exploring our options for the retail space, to ensure the best fit for The Heeren," it added.

Likewise, a spokesperson for Raffles City said: "We are in discussions with Robinsons on the smooth handover of the premises. Shoppers can look forward to a refreshed Raffles City tenant mix with the introduction of exciting offerings. More details will be shared in due course."