New brands have difficulty finding rentals in shopping malls

DNVN - In the context of the strong recovery of Vietnam's retail industry, new brands are facing many challenges when looking for rental space in shopping centers.

Retail - one of the most dynamic economic sectors has grown continuously over the years and is recovering strongly after the COVID-19 pandemic.

According to the General Statistics Office, in the first half of 2024, total retail sales of goods and consumer service revenue reached more than VND 3,098 trillion, up 8.6% over the same period last year.

At the same time, Vietnam's tourism has recorded good resilience in the post-pandemic period, contributing to the growth of the retail industry. These factors have promoted the need for international brands to be present and expand in the Vietnamese market.

According to Ms. Hoang Nguyet Minh - Senior Director, Commercial Leasing Department, Savills Hanoi, the demand for leasing at shopping malls is at a high level. In the second quarter of 2024, Hanoi recorded many exciting transactions at shopping malls.

Typically, the 4P's brand doubled the store area at Lotte Center Hanoi. The Gye Shige brand (Japanese barbecue chain) opened its first location in Hanoi in the Lancaster Luminaire project after being warmly received in Ho Chi Minh City. In Ho Chi Minh City, the new Vincom Mega Mall Grand Park project had a good absorption rate, accounting for 65% of the total market consumption.

Shopping malls are having more difficulty attracting and retaining tenants.

However, Ms. Minh analyzed, not all shopping malls are successful in attracting and retaining tenants. On the contrary, new brands also face many challenges when looking for rental space in shopping malls.

Savills' Q2/2024 report shows that in the Hanoi market, occupancy rates decreased by 3 percentage points compared to the previous quarter and 2 percentage points compared to the same period last year, reaching 84%. Meanwhile, retail podiums recorded a 7% year-on-year increase, but the occupancy rate of shopping malls decreased by 4 percentage points. Department stores alone maintained stable occupancy rates throughout the year.

The leasable area decreased by 49,800 m², of which the shopping center had a significant decrease of 54,000 m². The retail podium had the largest additional leasable area with 13,900 m².

“The occupancy rate at shopping malls has decreased despite high demand because shopping malls are in the process of changing brands. Many shopping malls are deployed as the base of apartment buildings. This model is not as attractive to retailers as large shopping malls, especially for brands in the fashion, cosmetics, and restaurant industries,” said Ms. Minh.

The retail podium type mainly attracts gym and coffee brands. However, the space here often has many columns or elevators serving apartments, making them less attractive than large shopping centers such as Lotte Mall, Vincom Retail, Aeon Mall. These places are carefully invested in tenant distribution and communication, creating a more attractive shopping and entertainment environment.

According to Savills experts, rising rents are also a challenge for brands, especially new ones, to find space to rent. In Hanoi, gross ground floor rents increased by 2% quarter-on-quarter and 13% year-on-year. Rents for shopping malls in the central area increased from VND3.1 million/m²/month to VND3.4 million/m²/month, while rents for department stores reached VND2 million/m²/month.

To solve the problem of vacant space but new brands still have difficulty finding suitable locations, Ms. Minh recommends that investors need to have a systematic tenant portfolio strategy. How to ensure a balance between consumer shopping and entertainment groups, meeting market needs to attract tenants.

At the same time, these businesses also need to carefully research the demographics of each area to ensure optimal leasing options. The management and operation unit needs to focus on management services, advertising programs, entertainment activities to stimulate demand, policies, and price support programs to ensure the number of customers coming to the shopping center.

Ha Anh

Source: https://doanhnghiepvn.vn/kinh-te/thuong-hieu-moi-gap-kho-khi-tim-thue-tai-trung-tam-thuong-mai/20240829032951486