Falling consumer spending and high rentals have forced many enterprises to return retail spaces in Ho Chi Minh City.

Many commercial spaces which were busy with business activities early this year are now deserted.

Up to 30 retail spaces are put up for rent on a two-kilometer section of Hai Ba Trung Street, which is one of the busiest streets in District 1.

One-third of them have been unoccupied for over a year, while the remainder have had no tenants since late last year.

Half of these spaces used to be leased by large brands in the fashion, cuisine, and cosmetics sectors, along with convenience store operators.

A prime site on the corner of Tran Cao Van and Hai Ba Trung Streets in District 1 which was earlier occupied by financial firm KSFinance is now vacant as well.

A representative of a domestic fashion brand told Tuoi Tre (Youth) newspaper that the retail space rental has surged while its sales have fallen. As a result, it had to close branches on Hai Ba Trung and some other streets.

The situation was also recorded on Nguyen Trai Street, which spans Districts 5 and 10, with nearly 10 clothing shops closed down while retail spaces on the street were rarely vacant earlier.

Landlords are also seeking occupants for five spaces on Nguyen Hue Pedestrian Street in District 1 and six others on nearby Ho Tung Mau Street.

The lease of commercial spaces on Le Loi Boulevard is not positive as some 20 spaces remain unoccupied after metro line construction barriers were cleared from the boulevard.

High space rentals

Many retail spaces on Ngo Duc Ke Street, which is behind the Bitexco Financial Tower, fetch high rentals while some spaces have been mortgaged for bank loans, so many businesses do not dare to lease them, said representatives of many stores on the street.

H. from a food and beverage company on the street said retail spaces there are leased at US$5,000-8,000 each per month.

His company incurs losses of hundreds of millions of Vietnamese dong per month. (VND100 million = $4,264).

However, he still leases the retail space there to develop the brand and other branches have made up for the losses.

Spaces which have been used as collateral for bank loans and have been put up for lease for several months have found it harder to find tenants, H. added.

The demand for retail spaces on large streets and in apartment buildings and trade centers is still increasing, said Nguyen Van Dinh, chairman of the Vietnam Association of Realtors.

However, a high number of spaces on major streets are left deserted due to high rentals which have risen up to twofold against the pre-pandemic period.

Le Huu Nghia, vice-president of the Ho Chi Minh City Union of Business Association and the Ho Chi Minh City Real Estate Association, shared the view, saying that many retail spaces are left vacant in Ho Chi Minh City while their rentals are high, discouraging enterprises from leasing them.

Many household businesses have moved to alleyways to reduce their operation cost burden.

Duong Mobile store is a typical example.

The store was moved from Dinh Tien Hoang Street in District 1 with a rental of VND18 million ($767) per month to an alley on Tran Khanh Du Street with the rental halved, said Nguyen Ngoc Duong, the owner of the store.

In addition to a wave to return retail spaces, many brands have sought ideal locations to open their new stores.

A Katinat coffee shop was opened immediately after a South Korean fast-food Lotteria store closed at the corner of Tran Quang Khai and Nguyen Huu Cau Streets in District 1.

A Peugeot auto showroom also replaced a Dien May Xanh electronics store on Phan Dang Luu Street in Phu Nhuan District.

After two restaurants of large brands left spaces on Phan Xich Long Street in Phu Nhuan District, two other firms have taken over the spaces although the monthly rentals amounting to $8,000-10,000 each.

Like us on Facebook or  follow us on Twitter to get the latest news about Vietnam!