HCMC retail space fully leased despite high prices

As of November most District 1 malls such as Saigon Center, Parkson Le Thanh Ton, Vincom, and Diamond Plaza are almost fully occupied, with only a few shops available either in the basement or top floors.

A major F&B brand in the city wants to open a new outlet on Dong Khoi Street, one of the most expensive places to rent in the city, and to expand an existing store, but the lack of space has delayed the plans.

"We need more space, but finding a suitable location in District 1 has been challenging," it told VnExpress.

A coffee chain has had to change its business strategy after failing to find appropriate retail space in the downtown area.

It said: "It is extremely difficult to find a space in malls located in prime locations. We need a spacious area but most malls are fully occupied."

Property consultancy Avison Young Vietnam said there was no new supply in District 1 in the third quarter, and existing malls are fully occupied.

Around 75% of the city’s 1.5 million square meters of retail space is located in the suburbs, it added.

The lack of new supply, combined with high demand from luxury brands, have driven prices up.

District 1 retail rents were at US$275-300 per square meter per month in the third quarter, according to Avison Young.

Shopping malls are the first choice for many renowned brands entering the city market, which is why competition among brands for central locations is intense, David Jackson, its CEO, said.

Luxury brands such as Longchamp, Lush and Popmart all chose District 1 for their flagship stores despite attractive lease offers from suburban projects, he added.

Vo Thi Phuong Mai, head of retail leasing at another consultancy, CBRE Vietnam, said both the central business district and the wider HCMC area face a severe shortage of retail space.

The shortage of land means the low supply situation would prolong, with only one or two new podiums being launched in the short and most of them already leased, she said.

Rents are likely to remain at the same level, she added.