COLUMN
Metro Manila retail amid Middle East conflict: Aim to recover and rediscover
by Joey Roi Bondoc
Metro Manila’ s retail sector continues its gradual recovery, with vacancy easing to 10.8 % in Q1 2026 from 11.4 % in Q3 2025, driven by steady tenant take-up from both global and regional brands. New entrants such as Bershka, Anko, Nitori, and Maison Kitsuné highlight sustained confidence in the market, particularly in prime malls in major business districts. Vacancy is projected to further decline to 10.2 % by year-end, supported by stable demand and limited incoming supply. However, external risks, including geopolitical tensions, are expected to delay a full return to pre-pandemic vacancy levels until the first half of 2027, signaling a more measured pace of recovery despite positive fundamentals.
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At the same time, the retail landscape is evolving through premiumization and experience-led innovation. Total retail stock reached 7.9 million sq. m., boosted by new developments such as Ayala Malls Arca South and Park Triangle Mall. Developers are increasingly shifting toward curated, lifestyle-oriented formats, while foreign brands expand flagship and immersive store concepts. Malls are also prioritizing immersive experiences— introducing wellness amenities, hybrid spaces, and immersive attractions— to drive foot traffic. This transition reflects a broader shift from transactional retail toward experience-led destinations, positioning forward-looking malls to remain competitive amid changing consumer preferences.
Continued premiumization of retail
As of end-Q1 2026, total retail stock in the capital region reached 7.9 million sq meters. From Q4 2025 to Q1 2026, Colliers recorded the delivery of 96,400 sq meters( 1.0 million sq feet) of new retail space, with the completion of The Plaza Bagong Silang in Caloocan, The Shoppes at Park Mckinley West and Park Triangle Mall in Fort Bonifacio and Ayala Malls Arca South in Taguig.
National developers have been aggressively shifting towards premiumization. Upcoming developments
500,000 such as the Power Plant
450,000
Mall Angeles in
400,000 350,000
Pampanga, Robinsons
300,000 250,000
Bacolod, SM Harrison in
H1N1 200,000
Global Outbreak
Manila, and SM Nuvali in
150,000 Financial
100,000 Crisis
Laguna reflect a move
50,000- away from conventional mall models toward a
Source: Colliers Note: End-year vacancy figures are as of the end of Q3 more curated, lifestyle-oriented retail environment that highlights design quality and a differentiated tenant mix.
On the other hand, Colliers is also seeing premiumization being reinforced by the aggressive expansion of foreign brands, with some taking up massive physical mall space to accommodate their flagship concepts and experience-led layouts. Metro Manila malls are seeing a rise in foreign home furnishing and personal accessory brands taking up massive physical mall space. We are also seeing a number of retailers complementing their shops with cafes which act as foot traffic drivers.
More experiential, less transactional
New malls temper vacancy decline
Retail vacancy continues to improve
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Retail vacancy in Q1 2026 from 11.4 % in Q3 2025
In 2025, major developers have also reported an increase in consumer traffic. These developers attributed the increase in consumer traffic to new attractions and refreshed tenant mix across their malls. In our view, there is also a growing need to integrate immersive retail to draw in shoppers.
Some developers have introduced features such as pickleball courts, hybrid libraries, and other wellness facilities to enhance overall mall experience. Colliers believes that malls that evolve with shifting consumer preferences and invest in differentiated concepts are better positioned to sustain consumer traffic.
What’ s next for Philippine retail?
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 New Supply Vacancy at Year-End( RHS)
Mall developers are likely to continue building brick-and-mortar mall spaces but with limited and curated leasable spaces. Colliers Philippines sees the proliferation of smaller retail formats that capture the immediate needs of their captured markets. We also believe that the limited new supply will help faster recovery of the retail sector especially now that the Middle east conflict is likely to challenge gains achieved by the sector post-covid.
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Vacancy forecast for 2026
COVID-19
Colliers 1
ME Crisis
16.0 %
14.0 %
12.0 %
10.0 %
8.0 %
6.0 %
4.0 %
2.0 %
0.0 %
In our view, experiential retail is here to stay. But as mall operators attract more of these tenants that offer immersive retail, both retailers and mall developers should continue to innovate. After all, these renovations and innovations are important in encouraging Filipinos to spend.
While Metro Manila malls are renovating, we see similar redevelopments outside of the capital region. It is no longer surprising to see premium retail experience proliferating in key urban enters outside of Metro Manila such as Angeles City, Clark Freeport, Cavite, Laguna Cebu, Bacolod, Cagayan de Oro and Davao. We expect more mall developers and retailers to target high growth areas and maximize Filipinos’ propensity to shop.
Colliers’ Director and Head of Research, Joey Roi Bondoc 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.
Prior to joining Colliers in March 2016, Joey worked as a Research Manager for a research and consultancy firm where he handled business, political, and macroeconomic analysis. He took part in a number of consultancy projects with multilateral agencies and provided research support and policy recommendations to key government officials and top executives of MNCs in the Philippines.
He handles client engagement through market overview presentations, such as this one, to equity analysts, property investors, and real estate firms. He 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.
He regularly contributes articles for the Philippine Daily Inquirer, the Philippine Star, BusinessMirror and BusinessWorld.