No buzz in Orchard Road’s malls

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No buzz in Orchard Road’s increasingly vacant malls




May 06, 2016


by Wan Ting Koh


IT IS now getting more common to see vacant units or large hoardings covering shopfronts as you walk along Orchard Road, and these are not always because of renovation works. More tenants are giving up their spaces along Orchard Road, the prime shopping belt, amidst a gloomy economy. Urban Redevelopment Authority data shows that the vacancy rate in the Orchard Road area rose 1.2 percentage points to 8.8 per cent in the first quarter of the year, apparently the highest in five years.

Unfortunately, there is a vicious cycle to the retail industry, according to an ST article published on April 28. Imagine this: As customers walk past vacant or boarded spaces, they form a poor impression of that mall – one that would unlikely see them returning. This explains the decline in shopping traffic, which in turn discourages potential tenants from entering the retail market. It also creates losses for existing tenants, resulting in their exit from the retail scene. More units become vacant; the cycle continues.

Next, the rising popularity of e-commerce. There is no doubt that online shopping has won the hearts of many – for its convenience, affordability, variety – and is increasingly the preferred choice for more people.

The entry of retail brands Uniqlo and H&M into heartland malls have also taken a toll on the business of these units in city malls. Now, it seems like city malls can only place their bets on tourist traffic, said Ms Christine Li, director of research at commercial real estate firm Cushman & Wakefield, in the ST article.

Last week, we visited five malls to see how business was doing and saw no lack of vacant shop units.


Far East Plaza:





The mall opened in 1983 with 114 shops. We did a count of the number of units shown in the mall’s floor plans and later took a walk to see the number of stores that were vacant or shuttered. The mall comprises mainly small boutiques, hair and nail salons, and tattoo parlours, with eateries dominating the uppermost floor. When we visited on a weekday, we observed mainly office workers visiting the fifth floor during lunch hour. A quick round revealed only four shops shuttered or had leasing notices plastered in front.

A walk along the lower floors, however, revealed a different story. Of the 146 units on the fourth floor, 12 were closed. The neighbour of a corner shop that was placed for rent, Ms Elaine who worked in Hay’s Formula International, said that it had only been on offer for a few weeks. She noted that the unit used to be a beauty salon and had been split into three separate units to accommodate different tenants.

On our rounds, we bumped into one of Far East Plaza’s many property agents, Ms Josephine Chan from Orange Tee. She said that tenants faced demands of “sky high prices” from their landlords and some were just unable to sustain their businesses. Another problem she pointed out was “picky” landlords who refused potential tenants based on their businesses or brands. Tenants also faced manpower issues, such as difficulty in hiring staff, she added. Ms Chan said that rental costs have since dropped from $50 per square foot (psf) to $12 psf to attract more tenants.

Worse still is the ghost town on the ground floor of Far East Plaza. It is hard to believe it was once a thriving area filled with clothing boutiques and thronging crowds of teens who flocked there during the school holidays. Now, there is only a smattering of shops open. Curious onlookers glanced into them while passing through two columns of shops already boarded up. X-Craft, which sells bags and accessories, is one of the few remaining shops. Its shop assistant, Ms Jessica Chang, said that new tenants had came and left within a few months. The only stores that had a strong showing on the ground floor were small eateries such as Chot-Nun, a Korean dessert place, and Shihlin Taiwan Street Snacks. Similarly, at level two, only Gong Cha and noodle restaurant Eat enjoyed brisk business.

According to a Straits Times report in 2015, Mr Ong Kah Seng, director of property consultancy R’ST Research, proposed that the mall could be redesigned as a testbed for aspiring entrepreneurs. “If such an energising, new vibrant concept gets mass appeal and recognised, then it will earn accolades for the mall – as one which offers entry retailers a platform to successfully start their services,” he said.

Another suggestion for Far East Plaza to stay afloat was for it to undergo a major revamp. However, this strata-titled mall would require the consent of more than 500 individual owners, which may be difficult.



Mandarin Gallery:





Mandarin Gallery is a four storey building that houses high end retail brands such as Paul Smith and GR Luxury. It had gone through a major renovation in January 2009. Not all was hunky dory at the mall when we visited on a weekday afternoon. From the facade of the building, we could see ongoing construction works for a new Victoria Secret outlet and another by American fashion brand Michael Kors. But on the second and third floors, at least eight units were vacant or boarded up without any sign of potential new tenants out of the some 62 units. Traffic was slow, with mainly a trickle of tourists.

Landlords are claiming a 94 per cent occupancy rate, but the number of boarded or empty units seemed incongruous with the statistic. Unlike the front facing units which announced new tenants, the hoardings within the mall had ambiguous signage that stated “OMG we can’t wait to show you the best.” Some ex-tenants, like The Denim Store, had moved to other locations along Orchard Road.

The Denim Store vacated their premises on the third floor a month ago, to take up new premises in nearby 313 Orchard, leaving behind an empty unit that was visible behind glass doors. A few doors down, another unit that was home to Standard Chartered bank was boarded up. Ms Hasitawet Angthana, a part-time shop assistant at Flight 001 which faces the former premises of The Denim Store, said that customers who passed by were usually heading to restaurants Wild Honey or Ma Maison Tonkatsu. Flight 001 had luggage bags on sale.



Orchard Central:





At Orchard Central, hoardings covered most of the shopfronts from the ground to fourth floor as the mall is undergoing major renovation works, seven years after its official opening. The remaining shops which stayed open on the upper floors are suffering from the sparse inflow of shoppers, who may have thought that the whole mall was under renovation. Business for the food and beverage outlets on the seventh and eighth floors however, remained bustling.

We visited the floors which weren’t undergoing renovation to see how they fared. On the fifth floor was a confusing maze of shops which wound up all the way to the sixth floor in the form of a ramp. This ramp used to be dominated by numerous small retail boutiques, but was now silent and shuttered save for three – one of which was used as an art space.

The other two left standing were DZ Bags and Spinworkx, a shop which sold yo-yos and kendamas. On the fifth floor, Tagstyle, a shop selling ladies apparel, and a Korean Bingsu shop remained. Other shops on the fifth and sixth floors include Evolve, a mixed martial arts gym; Hom Yoga, an IT graphics school; and Totally Hot Stuff, a store which sold paraphernalia – gadgets, novel gifts, and household items.

Ms Fong, the manager of one of the shops that has been situated on that floor for two years, told us that the boutique stores on the fifth floor have been shuttered for close to a year. She thought they were likely to remain so. There haven’t been any prospective buyers eyeing the spaces, she said. She said shoppers who visit actually “come here for a purpose” – classes at the gym or school. Plus, rent was another factor. “The rents increase annually, so if there is no customer flow, it is hard to survive,” she said.

“For us, we are niche. We are the only physical store selling yo-yos in Singapore, and we are known as we organise Asia-Pacific competitions. We survive because of customer loyalty and because of our other events,” she said. She added that the layout of the mall was “so confusing” that people got lost walking around.

She wasn’t the only one who thought the layout was an issue. Ms Chris Lee, who mans Bubblegum, a store selling printed tee shirts on the sixth floor, agreed that the layout was a problem. She compared OC to Causeway Point, a suburban shopping mall beside Woodlands MRT where the shops were all visible at a glance. “Here, when you come out of the lift, there is nothing,” she said.

The store gained customers and revenue by having booths in the universities. “We sit here every day and some days, we get zero customers. It happens to everybody,” said the 49-year-old. The shop assistant had worked at two different clothing stores before settling at Bubblegum last year. Both businesses had not lasted past a year. Was it the high rent? Not really, said Ms Lee. To her it was more to do with the traffic. “The rent is not expensive but business is not buzzing, we have to depend on regulars,” she said.

What else kept people coming then? Food, said both Ms Fong and Ms Lee. The upper levels of the mall, which host F&B businesses such as K.Cook and Kiseki Japanese Buffet Restaurant, saw regular throngs of people during lunch and dinner hours. Even at level four, situated in the midst of all the hoarding, the themed Pompompurin Cafe was teeming with patrons, with a queue of around 30 patrons forming at the entrance at three in the afternoon. At least 11 other units were open out of the total 18.


Orchard Gateway:





Right next to OC, Orchard Gateway is directly accessible from Somerset MRT via a link to its basement one level. However, this traffic does not seem to reach the upper levels of the mall. The mall officially opened its doors a mere two years ago, and the landlord claims that the occupancy rate is at 98 per cent, but the vacant shop units in parts of the mall showed otherwise.

On the third level, out of 19 units, around four were boarded up. A shop assistant at a ladies apparel store, who only wanted to be known as Ms Pamela, said that those shops, which closed about a month ago, had barely any traffic, even when they had “huge sales”. Her own store survived on a base of regulars who came back to buy their clothing. She added that even though there was more traffic now that OC is under renovation, customers were still headed for the mall’s restaurants.

In basement two of the mall, out of some 45 units, at least two units were closed and another was used as a resting space. Upmarket home decor and furniture store, Crate and Barrel, took up five units. A shop assistant at Underground, a ladies apparel store, who wanted to be known as Ms Fiona, said that they received around 10 to 20 walk-in and regular customers daily. The store has a total of 11 branches. She thought that the bad economy was to blame for the slowing traffic. “Those who have a budget would rather go to Bugis Street. It depends on their mood and how much they can afford,” she said.



Pacific Plaza:





It was an even more dismal scene at Pacific Plaza, located beside Shaw Centre, where more than half of the units on the first floor were covered by hoarding. An Adidas Original store and Starbucks were the only two units that were operating on the first floor of the mall. You couldn’t tell that the mall used to house high fashion brands Miu Miu and Prada.

Formerly, one of the mall’s most memorable attractions is That CD Shop. It was one of the few remaining CD shops that made its presence on the ground level, blasting music through its open doors. The store occupied the first and second levels, and was mentioned on travel website TripAdvisor as a place for “genuine” CDs. We are not sure when That CD Shop made its exit, but the last review on Trip Advisor dated back to 2014.

Now, the only deafening thing on the first floor is its silence. The other units there were covered with hoarding which promised “new exciting stores coming your way.” We spoke to shop assistants Ms Joyce Lee and Ms Isabelle Neo from Twirl and Twirl, a second floor shop which sold gymnastics and ballet apparel for girls, and they said that there was little “trickle-down” traffic from the steady stream of yogis. This group only visited True Yoga, which occupies 13,000 square feet, and Bikram Hot Yoga, which occupies 5,000 square feet, on the fourth and fifth floors respectively. Instead, Twirl and Twirl gets a niche group of customers who seek them out specifically to buy ballet shoes or outfits.

It was the same story for a clinic on the third floor. A part-time assistant, who wanted to be known as Ms Tham, said that they get “regulars and a loyal base who come for consultation and word gets around too.” Of the other stores in the mall, she said: “Sometimes I don’t work for some months, and when I come back, the shops are gone.” Not all is lost however – some shops were as long-lived as others were short. One example is Quintessential, a longstanding handbag and jewellery store that counts at least 10 years of residency at Pacific Plaza.

However, efforts have been made to revive the retail scene. Orchard Gateway and Orchard Central’s landlords have started to offer rental rebates of 20 to 30 per cent a month, in a bid to lure tenants. Orchard Central and Mandarin Gallery also had pop-up retail stores last year. In addition, malls are looking at the expansion of F&B businesses, cleverly tapping on our love for food.


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