Why retail leasing demand in downtown Singapore outpacing secondary areas?

F&B brands, especially Chinese groups, are driving leasing demand in downtown Singapore.

Singapore's retail market continues to exhibit a two-tiered structure, characterised by robust demand in downtown areas whilst secondary locations experience slower activity, CBRE reported.

This highlights the varying dynamics within the market, with downtown retail thriving in comparison to its suburban counterparts.

In downtown Singapore, food and beverage brands, particularly those from Chinese groups, are driving leasing demand. These brands are focusing on space optimisation, often opting for smaller units in strategic locations. Additionally, luxury retailers are maintaining steady interest, leading malls to allocate more space for this high-end segment.

Conversely, secondary areas are witnessing consolidations among supermarkets, which are downsizing or closing less efficient stores to concentrate on their top-performing locations. 

The entertainment sector is also expanding in these regions, with new children’s amusement centers emerging, though at a slower pace than in downtown areas. Niche retailers, such as those specialising in gaming and collectibles, are beginning to fill the gaps in secondary spaces.

Looking ahead, the upcoming Rapid Transit System linking Singapore to Johor Bahru, Malaysia, set to complete in 2026, may influence foot traffic and sales dynamics, requiring landlords to reassess their tenant mixes accordingly.

Whilst consumer spending remains resilient, CBRE saidlandlords need to be mindful of high operational costs facing retailers, especially regarding occupancy and labor. Retailers are encouraged to leverage analytics tools for informed decision-making in navigating this two-tiered market landscape.