Muted near-term completions help support occupancy despite softer leasing demand and rising tenant churn
Savills Research shared that Singapore’s retail vacancy rate held steady at 6.3% in Q1/2026 despite softer leasing demand and rising tenant churn, as a muted supply pipeline continued to support occupancy fundamentals, particularly for well-positioned retail assets.
According to Savills’ estimates, the pipeline supply of retail space is projected to be approximately 427,000 sq ft of net lettable area (NLA) in 2026, slightly below the five-year historical average of 474,000 sq ft. New completions are expected to taper further in 2027 before a fresh supply wave from major redevelopment projects comes onstream from 2028 onwards.
As a result, annual retail completions are projected to average around 270,000 sq ft (NLA) over the next two years, approaching the record low of 237,000 sq ft completed in 2020.
Leasing demand across the Central Region continued to show signs of softening in Q1/2026, as business closures led to pockets of vacancy, particularly in secondary locations and less prominent units. However, the suburban retail market continued to demonstrate relative resilience, supported by limited new supply and stable catchment demand, resulting in a net absorption of 140,000 sq ft in the first quarter.
Well-managed malls with stable footfall, good accessibility and a complementary tenant mix continued to attract healthy leasing interest, particularly along prime shopping belts. For example, the prime unit vacated by T2 Tea at 313@Somerset in March was quickly taken up by Goldheart.
However, leasing conditions remained a challenge for smaller malls, retail strips and units lacking direct connectivity to major transport nodes or low in visibility. Bugis Street, once a vibrant draw for both local and tourist shoppers, now has only about 20% of second-floor shops in operation, reflecting weak occupier demand in less visible locations.
Against this backdrop of selective leasing demand and rising tenant churn, retail rental performance softened further in Q1/2026. According to Savills’ basket of retail properties, average monthly rents for prime malls in the Orchard Area remained broadly flat, edging up 0.1% quarter-on-quarter to S$23.60 per sq ft in Q1/2026. In the Suburban Area, average monthly rents increased 0.2% QoQ to S$14.90 per sq ft.
Sulian Tan-Wijaya, Executive Director, Retail & Lifestyle, Savills Singapore said, “Retailers are becoming increasingly selective about where they commit space, with stronger demand concentrated in malls that offer stable footfall, good accessibility and a well-curated tenant mix. Consumers today are also placing greater value on retail experiences, prompting landlords to introduce more experiential, lifestyle and F&B concepts to drive visitation and dwell time. As a result, prime and well-positioned malls continue to attract healthy leasing interest, particularly from overseas brands entering Southeast Asia.”
Alan Cheong, Executive Director, Research & Consultancy, Savills Singapore, commented, “The retail market is showing signs of bifurcation. While weaker secondary locations continue to face leasing challenges, the limited near-term supply pipeline is helping to keep overall vacancy stable and support occupancy fundamentals for stronger-performing assets.
Looking ahead, landlords are expected to continue prioritising tenant mix optimisation and experiential offerings to drive traffic and sales. Although rental upside may remain limited, the muted supply pipeline over the next two years should help cushion downward pressure on rents, particularly for well-positioned retail assets. As such, we expect rents for both Orchard Road and suburban malls to increase by up to 2% this year.”
Table 1: Notable Projects above 100,000 sq ft in the Pipeline