Manila’s retail sector is undergoing a transformation, driven by innovation and strategic positioning, according to the first-quarter report by investment management company Colliers.
“For the Metro Manila retail sector, innovation is the name of the game. We see aggressive transformation of retail spaces as operators scramble to attract new foreign retailers and sustain footfall. Expect more refreshed leasable spaces in the years to come. Retailers are also likely to be more strategic especially with transit-oriented retail becoming the norm,” said Colliers director and head of research Joey Roi Bondoc in a briefing Thursday.
Retailers are advised to prioritize securing spaces in business districts with strong office and residential leasing activity. Hubs with upcoming condominium and office tower completions within the next year present promising opportunities.
Food and beverage (F&B) and fast fashion are expected to dominate mall space acquisition in the next 12 months, while lease rate hikes may be moderated by the influx of new mall openings in Metro Manila.
Colliers said the Manila retail landscape is evolving to adapt to changing consumer preferences and maintain its vibrancy beyond the initial post-pandemic surge. The transformation is driven by a focus on innovation, strategic location choices and a diverse tenant mix.
Meanwhile, the pre-selling condominium market in Metro Manila is experiencing a slowdown, with developers reporting tepid launches and take-up, due to rising mortgage rates and the long remaining inventory life of existing units.
Colliers anticipates a significant influx of new condominium units in the coming year, potentially leading to increased vacancy rates within the secondary market.
“Developers need to recalibrate their strategies especially with slow launches and take up in the Metro Manila pre-selling condominium market. Greater land banking and launch of horizontal projects outside Metro Manila looks viable at this point. But there should be more pronounced differentiation of master-planned projects to capture the interest of investors and end users,” Bondoc said.
The office market continues to hold steady, with a vacancy rate of 19 percent in first quarter 2024 compared to 19.3 percent in the same period last year, said Colliers Office Services – Tenant Representation director Kevin Jara.
The positive trend is attributed to a balance between new supply and space returned to the market through non-renewals and downsizing by some occupiers.
“We urge occupiers to strategically plan ahead and take proactive measures in their real estate strategy to capitalize on the prevailing tenant leaning market. Developers are also encouraged to ramp up their provincial portfolio, especially in underserved markets, to support IT BPM countryside growth,” said Jara.