By Curt Hazlett
When it comes to retail development, Singapore is the little engine that can’t stop. The island city-state, which is ranked 191st among nations in size, but sixth in gross domestic product, never seems to stop refining, renovating and redeveloping its shopping districts, even when construction cranes are rusting in other parts of the world. The most recent example is Orchard Road, regarded as Singapore’s equivalent of New York City’s Fifth Avenue. This mile-long district, once the province of nutmeg and fruit trees, began sprouting shopping centers in the 1970s and is now home to some two dozen of them.
Change is a constant on Orchard Road. CapitalMall Trust’s Plaza Singapura, one of the first centers, opened in 1974 and was completely reconceived in 1997. Macquarie MEAG Prime REIT’s Wisma Atria center opened in 1986 and was rebuilt with an all-glass exterior just eight years later. Other centers too have been given thorough face-lifts. Aging, even gracefully, is not a strategy for success on Orchard Road.
Meanwhile, new centers have kept rising, three in 2009 alone. First came Singapore developer Far East Organization’s Orchard Central, the city’s tallest, at 12 stories. Three weeks later came CapitaMalls’ ION Orchard, whose massive, undulating glass walls serve double duty as giant media screens. Then in November 2009 came 313@Somerset, the first development in Asia by Lend Lease Group. ION Orchard and 313@Somerset are now the city’s most visited malls, along with Ngee Ann City, Orchard Road’s largest, according to a poll by the Straits Times newspaper.
“Shopping center owners are very conscious of the competition and new provisions that come into the market,” said Danny Yeo, a group managing director at brokerage firm Knight Frank Singapore. Orchard Road property owners “on average, say every seven to 12 years, are very likely to do a partial or complete revamp.”
Recognizing the value of curb appeal, the Singapore Tourist Board has made sure to keep Orchard Road’s infrastructure up to speed. In 2009 it finished a two-year, S$32 million (about $26 million) upgrade that added pedestrian walkways, outdoor performance and exhibit spaces carved from traffic lanes, and new plants and lighting.
Singapore’s resilience has certainly brought cheer to Orchard Road. Last year, as Western economies continued to struggle, Singapore’s GDP exploded by nearly 15 percent, helped by a strong recovery in tourism. Economic strength also fostered two resort casinos that opened last year and greatly expanded the amount of retail space in the city. The added space helped keep prime retail rents in the central Orchard Road area flat, at about S$41.81 per square foot in the first quarter, according to Knight Frank. It also encouraged a flight of retailers from lower-quality properties to the suburbs.
Still, Yeo says, there is no need to worry about Orchard Road’s long-term health. Its retailers “are always renewing themselves and trying to put themselves ahead of the competition,” he said. “Every few years you will always see something fresh.