STUDY ON RETAIL SPACE’S REPOSITIONING TO LOGISTIC CENTRE

Abstract

This paper conducted an empirical study on the similarities of retail rental prices and warehouse rental prices with the purpose of supporting an initiative named repositioning from a retail space to a mini distribution centre. As the retail sector was so heavily dampered by the ongoing pandemic shock and the competition with online shopping, bringing back the footfall had become a critical problem to solve for both landlords and tenants. With the data collected from URA and JTC, the single and multiple regression models for both sectors did reveal some similarities on the coefficients of 25th percentile and 75th percentile rents when compared to the median rents. The former would usually have a higher positive value while the latter would have a lower positive one. In other words, the changes in lower end rents would affect the median rents to a greater extent than the higher end ones. Sadly, due to limitations of data, the paper could not conduct a qualitative study on the repositioning strategy itself, but will serve as an exploration on building a financial bridge for landlords and tenants that had only focused on one submarket in their past experience. Nevertheless, with the vast growth in e-commerce and expectation on delivery quality, the repositioning concept would not be an odd proposal in the near future.