THE METRO MANILA retail sector is poised to deliver 158,000 square meters (sq.m.) of new space annually through 2027, as physical mall space take-up returns to pre-pandemic levels, according to property consultancy firm Colliers Philippines.
“From 2025 to 2027, Colliers projects the annual delivery of 158,300 sq.m., up from our previous forecast of 132,700 sq.m. Among the malls likely to be completed during this period include Ayala Malls Parklinks, Ayala Malls Arca South, Filinvest Mall Cubao, and the Glorietta and Greenbelt redevelopments,” Colliers Philippines said in its first-quarter Metro Manila Retail Report.
The completion of 270,000 sq.m. is expected in 2025 alone, driven by the redevelopment of SM Megamall in Mandaluyong City.
“We expect a slowdown in the completion of new supply [from 2025 to 2027] as developers focus on redeveloping existing malls across the capital region,” Colliers added.
Food and beverage retailers are expected to occupy about 45% of new retail spaces in the next 12 months, followed by clothing and footwear (14%), others (14%), beauty and wellness (9%), and fashion accessories (8%).
Between the third quarter of 2024 and the first quarter of 2025, approximately 250,000 sq.m. of new retail space will be delivered, following the completion of the SM Mall of Asia expansion in Pasay City.
Metro Manila’s retail vacancy rate improved to 13.1% in the first quarter from 15.1% in the third quarter of 2024, marking the lowest vacancy rate since 13.8% in the first quarter of 2021. Significant take-up was recorded during this period, driven by newly completed malls such as Gateway Mall 2, GH Mall, Opus Mall, One Ayala, SM Bicutan, and the SM Mall of Asia expansions.
Colliers projects Metro Manila’s retail vacancy rate will fall to 13% by the end of 2025, as developers focus on renovating existing mall spaces, thereby preventing further increases in vacancy rates and supporting steady consumer traffic.
“Colliers is optimistic that Metro Manila mall vacancy will revert to pre-COVID levels by the end of 2026. We attribute this to greater absorption of mall space (due partly to take-up from large retailers including foreign home furnishing brands) and a managed level of new retail completion,” said Joey Roi H. Bondoc, director and head of research at Colliers Philippines, in the report.
Over the next 12 to 24 months, Colliers anticipates increased absorption of brick-and-mortar mall space as developers and retailers continue upgrading their spaces across Metro Manila.
Mall developers are set to invest between P13 billion and P21 billion to develop and refresh retail spaces. Consumer traffic has also exceeded pre-pandemic levels, according to Colliers.
“This is also an opportune time for operators and their retailers to aggressively promote their renovated spaces and entice more mallgoers to stay longer and spend more within retail centers,” Colliers said.
The shift of residential developers to suburban areas presents an opportunity for mall developers to expand beyond Metro Manila.
“Property firms have been expanding their residential footprint outside of Metro Manila, and in our opinion, developers should complement these projects with the ideal size of retail components,” Colliers added.
Colliers also noted that additional rate cuts could further support demand in the retail sector.
The Bangko Sentral ng Pilipinas (BSP) recently reduced its key policy rate by 25 basis points (bps), bringing it to 5.5% from 5.75%. BSP Governor Eli M. Remolona, Jr. indicated that further rate cuts will likely be made in 25-bp increments.
“To continue locking in retail opportunities, mall developers should ramp up efforts in offering refreshed retail spaces and explore the viability of housing more popular retail segments that also absorb significant retail space, including brands from home furnishing and personal accessory segments,” Colliers said. — Beatriz Marie D. Cruz
