Vacancy in Metro Manila’s retail property is seen to soften to 10.9 percent in the third quarter of the year from 13.1 percent in the first quarter this year, according to a report of property consultancy Colliers.
Colliers projects further expansion from foreign retailers, including those from the home and furnishing and clothing and footwear segments.
Similar to previous years, food and beverage (F&B) will dominate mall space take-up, it added.
Available retail spaces will slightly decline to 835,000 square meters (sq.m.) by the end of August this year from 1.02 million sq.m. as of the end of March 2025, the report said. Occupied space, meanwhile, will increase to 7.1 million sq.m. from 6.8 million sq.m. Colliers noted a healthy takeup from recently completed malls including Gateway Mall 2, GH Mall, Opus Mall, One
Ayala and the SM Bicutan and SM Mall of Asia expansions.
Among the retailers that opened shop from the third quarter of 2024 to the first quarter of 2025 in Metro Manila include Cong Caphe in Gateway Mall 2, 361 Degrees in SM North EDSA, Vivaia in Powerplant Mall, Longhorn Steakhouse in Shangri-la Plaza, Nitori in Festival Mall and Muji in Glorietta.
Over the past 12 months, some of the retailers that took up space include: Gashapon Bandai Official, KKV, HLA, Flying Tiger, Nitori and the Matcha Tokyo, Colliers said.
E-commerce
Despite the expansion and refurbishment of brick-and-mortar malls, online platforms will remain popular, according to Colliers.
A survey conducted by Colliers in the first quarter showed more than 40 percent of the respondents prefer to purchase clothes and shoes online, while about a fifth buy groceries using e-commerce platforms. Nearly 15 percent buy furniture and home appliances online despite the proliferation of big-box home furnishing retailers in Metro Manila.
“As mall developers continue to refresh mall spaces and entice more customers to visit physical malls, we expect online shopping platforms and their retailers to offer more discounts and promos to establish and expand a loyal online customer base,” Colliers said in the report.
The property consultancy said online platforms will continue to ramp up data security and feedback mechanisms to continue attracting buyers, especially the young workforce that has a constantly rising purchasing power.
Colliers also noted the need to improve logistics and delivery time as this is a major concern of online shoppers.
“Aside from offering more promos and discounts for online shoppers, e-commerce platforms should also ensure the safety and reliability of their sites so as to entice more consumers to purchase items online. Product variety is also important especially for young and affluent buyers that have constantly evolving preferences,” Colliers said.
Retail offsets residential, office
Colliers said the retail sector’s recovery has been offsetting lukewarm demand in other property segments, including residential and office which continue to face challenges.
On the whole, Colliers said, the country’s retail sector has been recording a sustained pace of growth due to tempering inflation resulting in interest rate cuts.
“With the Philippine central bank poised to implement more rate cuts for the remainder of the year, we see the retail sector further growing in the second half of 2025,” Colliers said.
Back to pre-pandemic
In a separate report, Colliers said mall vacancy will revert to pre-pandemic level, which is around 10 percent, by end-2026 due to Filipinos’ rising propensity to shop inside physical malls.
The report noted more malls have been lined up for completion beyond 2025 and these will also be located in thriving localities outside of Metro Manila. This proves that foreign brands are keeping an eye on key cities for expansion outside the capital region.
To continue locking in retail opportunities, Colliers said mall developers should ramp up efforts in offering refreshed retail spaces and explore the viability of housing more popular retail segments that also absorb humongous retail space, including brands from home furnishing and personal accessory segments.
Slowdown expected
Colliers said from 2025 to 2027, it expects a slowdown in completion of new supply as developers focus on redeveloping existing malls across the capital region “We observed a marginal rise in rents despite the growth in supply. Colliers sees a more sustained rise in rents over the remainder of the year as retailers continue to take up physical mall space and developers continue to offer refreshed spaces,” the property consultancy said.
Retail vacancy has improved as Colliers recorded notable increase in openings across recently completed malls, particularly during the last holiday season.
By end-2025, Colliers expects vacancy to remain stable as “we project limited new supply in the second half of 2025.”
“Colliers is optimistic that Metro Manila mall vacancy will revert to pre-COVID level by end-2026. We attribute this to greater absorption of mall space (due partly to take-up from large retailers including foreign home furnishing brands) and managed level of new retail completion. With a more favorable retail environment supported by slowing inflation, Colliers sees greater physical mall space absorption moving forward and we see developers with massive retail footprint benefiting from the segment’s robust growth prospects,” said Joey Roi Bondoc director at Colliers.
Recommendations
Colliers said the upgrading of mall spaces across Metro Manila will contribute to greater brick-and-mortar mall space absorption in the next 12 to 24 months.
Mall developers have been earmarking P13 to P21 billion to develop and refresh physical retail spaces, Colliers said.
“We believe that this is timely given that the mall sector within and outside Metro Manila has been recovering well post-COVID. Some developers even report that consumer traffic is now greater than pre-COVID level,” the report said.
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 added this recommendation also applies for malls being built and upgraded outside of the capital region.
Some of the upcoming ones are Rockwell which will open Power Plant Malls in Angeles City and Bacolod City in 2027. SM and Ayala Malls which are setting their sights on key cities including Cebu, Davao, Iloilo and Bacolod.
Opportunities
According to Colliers, food and beverage (F&B) is likely to cover about 45 percent of new retailers that will occupy new mall space in Metro Manila over the next 12 months.
Over the past few quarters, major developers including Ayala and SM brought major home personal accessory and home furnishing brands including IKEA, Anko, Flying Tiger, Nitori, etc.
Colliers said there are opportunities for these brands to expand within and outside Metro Manila given the rising retail footfall, growing purchasing power of Filipinos even in Areas Outside the National Capital Region (AONCR), and redevelopment plans in the more established business hubs including Makati CBD.
“In our view, mall operators should further assess the viability of opening similar brands and concepts in AONCR and check if these markets are indeed ready to welcome these major foreign brands that also occupy massive retail spaces, resulting in greater brick-and-mortar space absorption,” the report said.
