Trade Centres Finding Ways to Retain Tenants

Gone is the time when enterprises felt disappointed that they could not hire a place in trade centre such as Viet Tower, Grand Plaza, The Garden. Currently, conveniently located trade centres still have a high vacancy rate, with many tenants shutting down their shops, finding ways to get out….

 

Indochina Plaza Hanoi commercial centre (Xuan Thuy street, Cau Giay district), beautifully designed with 5 floors and total area of 18,000 sq.m, opened on 31^st August 2012, but the occupancy rate remains at only 77 percent. There were only several shops opened on the opening day, with the other 80 percent of tenants completing their areas.

 

In September 2011, after a long period of renovation, former Hang Da market officially went into operation with a new face and rename the ‘Hang Da Galleria'. Despite the total of 5 floors, CBRE the rental and management agent for the 2^nd,3^rd and 4^th floors, a total of 7,000 sqm, has faced a number of difficulties from tenants. As early as 2009, the project owner of Grand Plaza commercial centre (Tran Duy Hung street, Cau Giay district) a pioneer of the trend of selling retail space to both individuals and retail investors over the long-term, however the commercial centre has also had to elaborate policies on competitive prices and find means of supporting investors to attract consumers to the centre.

 

The recent, massive development of commercial centres combined with current economic difficulties has witnessed consumer behavior reduced to minimum levels. Products find no consumers. Ms Nguyen Thuy Tinh - seller of Heat Wave shoes in Hang Da Galleria said that: She worked here for almost 1 year, however consumers came infrequently. Shops discounted their prices many times but there were few buyers.

 

Increased unemployment and peoples reduced spending have directly influenced buying power in commercial centres. The number of empty booths increases both inside and outside the centres because many tenants have closed. Meanwhile, the pressure of the rent along with other costs and poor purchasing power has created the burden for businesses.

 

According to the survey of CBRE Vietnam, the increasing trend of closing trade centres and retail shops has continuously occurred for the last quarter. Specifically, out of 168 shops and trade centres that are newly opened, closed or being completed, closed ones account for 48 percent, while newly open ones take only 39 percent. Nevertheless, the rent of commercial centres in the city suburbs has increased about 11 percent over the previous quarter. Meanwhile, the market will received about 650,000 sq.m of retail area from now to the end of 2013, the supply of this type will double compared to that this year.

 

In order to retain customers, commercial centres have introduced many solutions to attract buyers, discount rents and support consumers with services. Most recently, Grand Plaza has a policy of completely free rent for the first 6 months and a revenue sharing programme and, after that, a discount of 40 percent for the first year and 30 percent for the second. The promotion programme will last for two or three years with tenants of long term contracts - Mr Hoang Duc Anh, Managing Director of Grand Plaza centre said.

 

Dr Nguyen Minh Phong, economic experts said that: Hanoi has a redundant amount of square meterage for rent in commercial centres because of the economic turmoil. In fact, there are several markets that have been changed into small scale commercial centres and are still not meeting the real demand of people, leaving unproductive space. However, Dr Nguyen Minh Phong warned that: Looking in a far horizon, Hanoi will still lack modern, international scale commercial centres. It is important to plan and construct modern centres. In the context of economic difficulties, commercial centres should share profits to reduce the pressure of rent and service for investors. At the same time, they should change business strategy and create an image of modern and consumer - oriented commercial centres.