27-05-2025
Forum: Lessons from other cities in curbing rising commercial rents
I refer to the article 'Rising rents put the squeeze on small businesses: Should the Govt do more?' (May 26).
Indeed, Singapore's small businesses are grappling with rising commercial rents, with some, like Flor Patisserie, facing steep increases of up to 57 per cent.
This growing pressure reflects challenges seen in other major cities, and Singapore will need to strike a balance between market forces and sustaining its entrepreneurial ecosystem and neighbourhood identity.
Taking cues from strategies employed elsewhere may offer some viable solutions.
One approach is rent-to-revenue leasing, where tenants pay a percentage of their sales to landlords, instead of a fixed monthly rent. This model, used in countries like the US and Australia, fosters a more equitable risk-sharing dynamic between landlords and tenants while alleviating financial strain on emerging businesses.
We could assess its suitability in Singapore with a pilot initiative in Reit-managed malls.
Another method, the pop-up-to-permanent lease model, has demonstrated success in places like London's Boxpark Shoreditch. This model provides new businesses with short-term leases, with the potential to transition into longer agreements. It will enable new businesses to prove their viability while landlords reduce vacancy rates.
Singapore's heritage areas could benefit from this model, supporting local entrepreneurs while preserving the character of these districts.
Singapore can also evaluate the idea of a vacancy tax, which discourages landlords from leaving properties vacant. Such a policy could increase the availability of affordable commercial spaces, but would require stringent enforcement measures to prevent the loopholes that have weakened similar initiatives in cities like San Francisco.
Meanwhile, we should remain cautious about direct rent controls, which led to reduced property upkeep and declining investment in Berlin.
There are also emerging ideas which have potential, like community equity leases, where landlords hold small stakes in tenant businesses. This idea could be useful in targeted sectors or heritage conservation districts, but would require further refinement before broader implementation.
Ultimately, a structured, phased approach would be best to sustain Singapore's vibrant small business landscape while upholding its pro-business climate and learning from global experiences.
Keith Wong
More on this Topic Forum: What readers are saying
Join ST's Telegram channel and get the latest breaking news delivered to you.
