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Cebu mall operators , retailers brace for revenge shopping and dining
Joey Roi Bondoc is Colliers ’ Associate Director and Head of Research . he covers residential , office , retail , leisure , and industrial segments and conducts macroeconomic analysis and regularly assesses the impact of economic growth to the real estate sector . He handles client engagement activities through market overview presentations to equity analysts , property investors , and real estate firms , and has become quite a familiar face in the local and even regional real estate news circles as his reports have consistently been cited by national news programs and major broadsheets .
The Philippine economy surged by 8.3 % in Q1 2022 . We see this benefiting the retail sector as the domestic economy is mainly consumption-driven . In our view , Metro Cebu will benefit from the retail sector ’ s recovery as it is the largest metropolitan hub outside Metro Manila . The expansion of its consumer base , supported by our projected growth in office and residential supply , should sustain retail buoyancy post-2022 .
In Q1 2022 , vacancy across malls in Metro Cebu reached 6.4 %, higher than the 2.6 % recorded in 2018 . The Covid-19 induced disruptions have resulted in the closure of some brick-and-mortar shops especially in regional and super-regional ( 50,000 sq metres and above of leasable area ) malls .
Food and beverage to lead take-up ; vacancy to drop in 2022
Colliers estimates that about 60 % of upcoming retailers in Cebu are likely to come from F & B retailers followed by clothing and footwear at 17 %. This is similar to what we saw in Metro Manila in Q1 2022 where F & B accounted for 42 % of new retailers followed by clothing at 17 %. Some of the new and upcoming retailers in Cebu include Nature Republic , New York Fries & Dips , Sumo Niku , Lantaw Seafood and Grill , Nanyang . Skechers is set to open its biggest branch in Cebu . By the end of 2022 , we see vacancy dropping to about 5.5 % as we project retail space absorption to pick up amid limited new supply . Colliers believes that the enactment of stimulus measures such as the Foreign Investments Act and Retail Trade Liberalization should facilitate the entry of foreign retailers and contribute to greater retail space take-up beyond 2022 . Major mall operators in Cebu should be proactive in tapping foreign retailers ’ retail space demand . The Inter-Agency Task Force for the Management of Emerging Infectious Diseases ( IATF ) also further relaxed Covid-19 restrictions in areas under Alert Level 1 by allowing all establishments ( indoor and outdoor ) to operate at full capacity . However , Presidential Spokesperson Martin Andanar said that “ proof of full vaccination must be presented prior participation in mass gatherings and entry to indoor establishments .” 1
Limited new supply National and local developers also continue to build new malls in Cebu . From 2019 to Q1 2022 , we have recorded the delivery of 87,800 sq metres ( 944,700 sq feet ) of new retail space with the completion of Ayala Malls Central Bloc in Cebu IT Park , Il Corso by Filinvest , and Elizabeth Mall expansion . From 2022 to 2024 , we see the annual delivery of about 44,400 sq metres ( 473,400 sq feet ) of new supply . Among the malls due to be completed are : Astra Lifestyle Center by Cebu Landmasters and Gatewalk Central Mall by Ayala and Aboitiz Land .
Sustaining retail demand Data from Philippine Statistics Authority ( PSA ) show that growth in household spending for non-essential items such as clothing and footwear grew by 11.9 % in 2021 , a turnaround from -16.4 % in 2020 . Household consumption should also be supported by continued inflow of Overseas Filipino Worker ( OFW ) remittances . In 2022 , the central bank projects remittances to grow by 4 % in 2022 . In 2020 , the Central Visayas region accounted for 5.3 % of total OFWs deployed abroad from 5.1 % in 2019 .
Colliers believes that the improving consumer and business confidence should also result in greater consumer traffic in malls A recently-released survey by the central bank noted that consumer confidence in the next 12 months surged to its highest level in more than four years . The 5.4 % growth of the Central Visayas region from a 9.9 % contraction in 2020 should also support the recovery in retail demand and other property segments . In our opinion , these factors should encourage more retailers to lease out physical mall space .
Expansion of Metro Cebu ’ s consumer base For office , we project the annual completion of about 67,100 sq metres ( 722,000 sq feet ) from 2022 to 2024 . More than half of the new supply will likely come from the Cebu IT Park , Mactan and South Road Properties ( SRP ). Meanwhile , Colliers also projects a record-high completion in the residential market as we expect the delivery of 10,300 condominium units in 2022 . Close to half of the new condominium units will come from Cebu City followed by Lapu-Lapu City and Mandaue City .
Prevailing headwinds However , the rising inflation is likely to clip consumers ’ purchasing power . Data from the central bank show that the country ’ s inflation reached 5.4 % in May 2022 , the highest since November 2018 . The central bank projects average inflation to reach between 5.0-5.8 % by the end of 2022 . Some of the headwinds that are also likely to affect the retail segment are the spread of new Covid variants , higher oil prices and global supply chain disruptions .
Colliers Philippines believes that the stronger-then-expected economic growth is likely to support the country ’ s retail sector . This optimism is likely to be seen in major economic centers including Metro Manila and Cebu . We also see greater potential for the retail sector of Metro Cebu as the leisure sector starts to recover after more than two years of slump .
1 IATF allows all establishments under Alert Level 1 to operate at 100 % capacity | Inquirer News
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