F&B operators drive retail leasing as 2026 demand strengthens

Prime retail rents are forecast to grow 1.5% to 2.5% in 2026 in Orchard Road and the suburbs.

Food and beverage operators are set to remain the main engine of retail leasing in 2026, with about half of new store openings in islandwide prime malls coming from F&B concepts so far this year.

Lifestyle brands are the next-strongest driver as landlords continue to push experiential retail formats.

Despite elevated churn, new-to-market entrants, especially Chinese retailers and F&B chains, are still expanding and backfilling space, helping keep overall demand firm.

The sales environment remains resilient: physical stores continue to dominate, online sales have settled at about 15% of total retail sales, and although consumers are more value-conscious, spending levels have held steady.

Operating conditions are mixed. Occupancy costs across major S-REIT portfolios have risen but remain below pre-pandemic levels, whilst tight labour supply and higher manpower costs continue to challenge F&B operators in particular.

Supply remains lean in the locations where demand is strongest. New retail completions are expected to average only about 0.3 million square feet a year from 2026 to 2029, and Tier-1 malls are near full occupancy, reinforcing landlords’ pricing power, especially in high-footfall Orchard Road assets and dominant suburban hubs.

Against this backdrop, prime retail rents are forecast to grow 1.5% to 2.5% in 2026 in Orchard Road and the suburbs, and 1.0% to 2.0% in other city locations, reflecting healthy retailer expansion and tight availability of quality space.

The two-tier market between top-performing malls and the rest is expected to widen further.

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