Non-conventional use of space in Singapore malls

July 17, 2018 / By  

It has been observed that non-conventional use of space is helping to prop up mall occupancy and boost foot traffic of late.

The integration of technology in retailing has gradually shaped consumers’ shopping behaviour. Specifically, the growing popularity and convenience of online shopping is altering traditional shopping patterns and contributing to the migration from physical stores to the online platform. This has resulted in a rise in retail vacancy rates from 2014 through 2017 (as reflected in the URA rental retail index) and raised oversupply concerns in Singapore.

Recognising the threat from technological disruption, landlords have explored the use of retail space for non-conventional uses, particularly those offering a platform for community gathering and networking such as public libraries, flexible work spaces and educational institutions.

In recent years, an increasing number of malls, particularly suburban ones, have added public libraries as tenants. While the move is part of a government initiative to make libraries more accessible to the public, landlords also benefit from bonus gross floor area at the mall. Notable suburban malls that house public libraries include White Sands, home to Pasir Ris Public Library and Northpoint City and NEX, which accommodate Yishun Public Library and Serangoon Public Library respectively.  In the CBD, Orchard Gateway and Chinatown Point have library@Orchard and library@Chinatown, respectively, as tenants.

The proliferation of co-working operations in Singapore in recent years has also led to a growing number of co-working operations — which typically occupy office spaces — joining the retail tenant mix. In the CBD, OUE Downtown Gallery houses a 24,000-sq-ft flexible work space operation, run by The Work Project, amidst mostly conventional retail shops, while China Square Central has co-working tenant ClubCo in its tenant mix.

Recently, co-working operator JustCo started a 60,000-sq-ft operation on the third floor of Marina Square to house more than 1,000 members. The operation combines retail and co-working elements within the premises and features a marketplace where members can showcase their products in complimentary booths. Additionally, Marina Square houses the new 100,000-sq-ft city campus of private education institute PSB Academy, also on its third floor.

By early 2019, One Raffles Place shopping mall will launch a co-working space tenant called Spaces that will occupy 35,000 sq ft across a few levels in the mall. Apart from hosting start-up companies, Spaces also plans to host fashion and retail-related events within the mall.

Creative deployment of retail space for non-conventional use, combined with other leasing strategies and an improvement in retailer and consumer sentiment, has contributed to a noticeable stabilisation of vacancy rates in malls in 2018. This is because non-conventional users generally absorb sizeable volumes of vacant retail space. Besides offering a good networking and community-gathering platform, with their relatively younger end-users, they also generate higher foot traffic and inject vibrancy into the malls, which in turn benefits other retail tenants in the malls and overall performance of the malls.

Going forward, embracing non-conventional uses in retail could be one of the key strategies to help landlords adapt to changing shopping behaviour.

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