Landlords turn to costly mall renovations to ward off aggressive e-commerce threat

Tenant remixing is another key strategy.

Retailers are turning to costly asset renovations in a bid to curb the threat of e-commerce, a report by CIMB revealed today.

CIMB stated that active tenant remixing and rejuvenation of malls through asset enhancement initiatives (AEIs) is the key to maintaining healthy tenant sales, occupancy cost and room for rental reversion.

The local online shopping market is projected to reach $3.66b (US$2.7bn) in 2014 and $4.7b (US$3.45bn) by 2015.

This figure makes up ~9-11% of total retail sales in Singapore, suggesting there is further room to grow compared against 15% in markets such as US and Europe.

“Landlords actively rejuvenate their malls through AEI and tenant remixing, and can reap economies of scale when negotiating with tenants. With SG50 and our expectation of an increase in tourism receipts, we are hopeful that things will start getting better for both retailers and landlords this year,” stated the report.

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