HONG KONG: Jewellers and luxury international brands have edged out restaurants in the upmarket IFC Mall in Central.
Commercial landlord Sun Hung Kai Properties has revamped the tenant mix of its joint-venture retail arcade by not renewing lease agreements with 10 restaurants to make room for those willing to pay much higher rents for the prime space.
"Over the past 18 months we have replaced the restaurants with tenants selling jewellery, watches, and international fashion brands who could afford to pay higher rents," said Karim Azar, assistant general manager for retail leasing at the mall.
The restructuring has seen space for food and beverage trimmed from 28% of the total retail space available to 24%. The mall has a lettable area of 450,000 sq ft.
Remaining food outlets would occupy reduced areas, down from as much as 4,000 sq ft to between just 300 sq ft and 500 sq ft. "These smaller outlets will now be selling things such as ice cream and yogurt," said Azar.
The change in tenant mix by the largest developer in Hong Kong in terms of market capitalisation sees the new tenants paying rentals up to three times higher than those paid by the restaurants. While restaurants typically paid HK$100 (RM38.94) per sq ft per month, said Azar, watch and jewellery retailers could afford to pay up to HK$300 per sq ft.
"We are benefitting from the limited supply of space in Central and have been able to raise our rents as so many big brands want to have a presence here," he said. Visitors to the mall would not be inconvenienced by the changes because there were lots of restaurants nearby, said Azar.
Among the restaurants to close as a result of the restructuring was the 3,800 sq ft Lian Vietnam, and the 4,000 sq ft Union Bar.
To keep up with the IFC Mall's luxury image, Azar said the landlord had brought in new tenants such as luxury watch retailer Elegant Watch and Jewellery which carries 50 international luxury brands such as Omega, Cartier and Chopard; and Italian menswear shop Kiton, which charges at least HK$50,000 for a suit.
Mall tenants saw a strong increase in their sales last year, said Azar, but now faced further increases in rents as their leases fell due during the year. He expected renewals would see increases in rents of between 15 and 20%.
At present, average rents at the mall were HK$250 to HK$300 per sq ft. Property consultants said IFC mall — which achieved a record rent of HK$650 per sq ft per month in Central's shopping centres — generated exceptionally good business last year with more than HK$6 billion in sales. The mall's top retailers each achieved more than HK$3 million sales in a single month, say agents.
Restaurants, which depend mostly on local consumers, have become victims of rising rents that has triggered an exodus from prime locations as retailers serving mainland customers move in at higher rentals.
Last week, property consultant DTZ announced that HMV, currently at the street level shop in Hankow Road, in Tsim Sha Tsui, would relocate to iSquare shopping mall nearby next month. DTZ advised HMV on its relocation move.
Property consultants attributed the relocation to the fact that the landlord raised the rent by some 130% to HK$3 million a month, from its previous HK$1.3 million.
Another retailer, Old San Yang, which has sold traditional food and hairy crabs in Causeway Bay for 29 years, as well as two neighbouring outlets have quit their premises for less expensive locations to make way for a European watch retailer in April. The watch retailer is believed to have agreed to pay HK$1.43 million a month for the spaces currently occupied by the three who together paid less than HK$800,000 a month.
Jeannette Chan, a regional director of consultancy Jones Lang LaSalle's retail department, said retailers targeting tourists had become very aggressive in bidding for space at prime locations. — SCMP
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