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Philippine retail industry :
Innovate or evaporate
By Joey Roi Bondoc , Associate Research Director , Colliers International
Mall operators are aggressively renovating and upgrading their leasable retail spaces to attract more consumers . Philippine and foreign brands continue to occupy mall space with some retailers even making a comeback to the Manila retail landscape by locating both in stand-alone malls and transit-oriented shopping centers . Pockets of renovation and total mall redevelopment are visible all over Metro Manila as landlords and retailers aim to sustain footfall and consumer spending despite dissipating impacts of revenge spending .
LOCK IN SPACES IN CBDS WITH BRISK ACTIVITIES
Makati central business district ( CBD ), Fort Bonifacio , and Ortigas Center continue to record office and residential vacancies lower than the Metro Manila average . We also see returning expatriates choosing residential units situated in these business hubs . Colliers believes that retailers should continue looking for available retail spaces in these locations especially with our expected influx of more outsourcing and traditional office tenants either transferring to or expanding in these business districts . Previously , Colliers highlighted the need for retailers to start locking in physical space in these CBDs especially with our projected rise in lease rates for the remainder of the year .
MAXIMIZE HIGH-DENSITY SPACES TO SUSTAIN FOOTFALL AND SPENDING
Colliers believes that developers operating regional and super-regional malls with expansive activity centers should promote more innovative use of high-density retail spaces . Previously , Colliers highlighted selected Metro Manila malls that are already offering flexible workspaces and vacant spaces as venues for gatherings and occasions such as Robinsons Malls . Ayala Malls , aside from actively mounting events in its activity centers , has also started offering pickleball games in selected branches . Mall operators should drum up interest in their activity centers by organizing trade fairs , exhibits , mini concerts , and other public events . Mall operators should explore which events are likely to raise consumer traffic and encourage mall goers to stay longer and spend more . There ’ s no doubt that there has been a heightened propensity for consumers to visit physical malls particularly given the new foreign retailers that have set up shop in the country . The challenge for mall operators and retailers now is how to sustain consumer footfall and entice more Filipinos to spend amid elevated interest rates and as inflation rises again after easing in January .
FLEXIBLE WORKSPACE IN MALLS AND / OR NEAR TRANSIT-ORIENTED DEVELOPMENTS
STRATEGICALLY LOCATE IN TRANSIT-ORIENTED RETAIL SPACES
In 2023 , Colliers has observed that some local and foreign brands transferred from stand-alone malls in Metro Manila to transit-oriented retail spaces like One Ayala . The latter ’ s retail component has an occupancy of about 60 %. As of March 2024 , One Ayala features a myriad of retailers from personal accessory , fast fashion , and food and beverage segments . In our view , One Ayala ’ s retail component greatly benefits from the presence of its 89,000 square meter ( 957,600 square feet ) office space , with outsourcing employees as among the shops ’ immediate market . Colliers believes that more foreign and Filipino retail tenants are likely to gravitate towards transit-oriented retail spaces for the remainder of 2024 .
These formats will also become more popular moving forward especially with the planned completion of major public projects in Metro Manila and other major cities outside the capital region from 2027 to 2029 including airports , railways , bus rapid transit systems , and the Metro Manila subway . We see the proliferation of retail shops in these public projects especially with the government ’ s commitment to ‘ Build , Better , More ’ and spend the ideal 5 % to 6 % of the country ’ s gross domestic product ( GDP ) on infrastructure .
From 2024 to 2026 , about 60 % of the new retail supply that will likely be completed in Metro Manila are regional to super-regional malls with gross leasable area ( GLA ) of 50,000 sq . m . and above ( 538,000 sq . ft . and above ). Colliers encourages flexible workspace operators to consider occupying space especially in transit-oriented mall developments especially now that footfall is reverting to pre-covid levels . Co-working space operators may also partner with retail establishments such as gyms , restaurants and cinemas to add value to their services . Malls are very good locations for flexible workspaces as they serve as one-stop shop for employees . Customers have easy access to restaurants , cinemas , and supermarkets . Retail centers also have strong transport links and access to parking .
AGGRESSIVE RENOVATION OF MALLS TO CATER TO EVOLVING CONSUMER PREFERENCES
Ayala Land is setting aside P13 billion ($ 230 million ) to renovate Glorietta , Greenbelt 2 , Trinoma in Makati CBD and Quezon City , and Ayala Center in Cebu . Across Metro Manila , some developers are also implementing pockets of renovation within their malls . Among the shopping centers currently undergoing pockets of renovation include Shangri-la Plaza , SM City East Ortigas , and Robinsons Manila . This aside from the 162,300 sq . m . ( 1.7 million sq . ft .) of new leasable retail space due to be completed every year from 2024 to 2026 . We expect these malls to integrate more activity centers as well as immersive or experiential spaces to take advantage of the revival of high-density retail . We also expect these new malls to feature a mix of local and new foreign brands , with the retailers offering more refreshed and ‘ instagrammable ’ spaces to capture mall goers ' attention .
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