Quarterly | Manila | 27 October 2022

Anticipating holiday spending

Mall operators and retailers cash in on improving
consumer traffic and greater purchasing power

Insights & recommendations

Filipino consumers’ propensity to shop and visit brick-and-mortar malls is starting to rebound. We
now see the resurgence of high-density retail segments such as family entertainment centres,
and this should result in greater traffic in malls. Many mall operators are reporting that consumer
traffic is starting to bounce back to 2019 levels. Colliers sees holiday-induced spending further
propping up the sector and supporting a slight rise in rents through end-2022. More retailers are
now willing to take-up physical space, which should bode well for retailers and mall operators. We
are optimistic that vacancy will improve by 2024 and this should lift mall lease rates.
We recommend that developers take advantage of the retail sector’s rebound and the lifting of
travel curbs by strategically opening malls sized to the catchment area considering the new retail
environment; curate retail mixes; future-proof high density retail; and utilize activity centers to
draw more customers and entice them to spend.
Q2 2022 – Q3 2022–26
2022 Full Year 2022 Annual Avg
The food and beverage (F&B) and clothing &
footwear segments continue to dominate
physical space take-up in Q3 2022. We see
Demand
more retailers opening shop due to holiday 4,600 sq m 256,000 sq m 198,300 sq m
spending and improving consumer traffic.

From 2022 to 2024, scheduled new retail

projects include regional and super-regional
malls in the Bay Area, Makati CBD and 16,000 sq m 356,000 sq m 198,200 sq m
Supply Quezon City.

Q2 2022-Q3 Annual Avg

2022/ YOY/ Growth 2021–26/
End Q3 End 2022 End 2026
Colliers saw a slight uptick in rents due to an
increase in consumer traffic and greater +0.4% +1.0% +1.5%
mall space absorption. We see rents
Rent increasing by 1% in 2022 after dropping by a
combined 15% from 2020 to 2021. PHP1,400 PHP1,408 PHP1,527

Vacancy across malls in Metro Manila rose to

15.4% in Q3 2022 from 15.2% in Q1 2022. +0.2pp +1.2pp -0.4pp
Colliers retains its forecast of 16% vacancy
Vacancy by the end of 2022 following the completion
15.4% 16.0% 13.0%
of new malls across the capital region.
Source: Colliers. Note: USD1 to PHP59 as of the end of Q3 2022. 1 sq metre = 10.76 square ft. Note: Regional malls have a gross leasable area of
between 50,000 sq metres (538,000 sq ft) to 99,999 sq metres (1.08 million sq ft); Super-regional malls above 100,000 sq metres (1.08 million sq ft).

1

“Consumer traffic is reverting to 2019 levels
and we see more retailers now willing to take
up physical mall space. Holiday-induced
spending should further buoy the retail
sector’s recovery, which should translate to
higher mall rents and declining vacancies.”
Associate Director, Research
Recommendations
Monitor retail segments vulnerable to
inflation spikes
Data from the Philippine Statistics Authority
(PSA) show that inflation as of 9M 2022 reached
5.1% from 4.0% in 9M 2021. In our opinion, this
will constrain spending on some consumer
subsegments. Hence, Colliers recommends that
mall operators and retailers constantly monitor
which segments are likely to be affected by
inflation spikes and which are likely to withstand
the impacts of rising consumer prices. Despite
rising inflation, we have observed that retailers
from the F&B and fashion segments continue to
take up physical space. Colliers’ data show that
the F&B segment will likely account for about
50% of the upcoming retailers followed by
clothing & footwear at 21%. This should also
enable mall operators to better curate and
future-proof their retail mixes.
Share of upcoming retailers in Metro Manila
3% 3%
4%
4%
6%
10% 50%
17%
Food & Beverage Fashion Accessories
Beauty/Health/Accessories Hobby /Gifts / Specialty Ref.
Fashion Others
Services Home
Metro Manila Retail supply and vacancy
forecast, (2012–2023F)
600,000
300,000
- 0.0%
2012 2013 2014
Source: Colliers
Assess ideal sizes for new malls
Colliers encourages developers to reassess the
ideal sizes for upcoming retail outlets as they
welcome more consumers under a better and
newer normal. From 2024 to 2026, we see the
delivery 62,000 sq metres (667,100 sq feet) of
new mall space yearly, only a fifth of the annual
Joey Roi Bondoc completion of 327,200 sq metres (3.5 million sq
feet) of new retail space that we recorded from
2017 to 2019.
Sizes of upcoming malls in Metro Manila (2022-
2025)
18% Neighborhood
27%
District Centre
9%
Regional
Super Regional
45%
Note: Neighborhood = 25,000 sq m and below; District Centre =
25,001-49,999 sq m; Regional = 50,000-99,999 sq m; Super-regional =
100,000 sq m and above
Innovative use of spaces to draw consumers
Colliers believes that mall operators should
reactivate their event spaces or activity centres
and attract more mallgoers by organizing events
such as trade fairs, exhibits and concerts to
drum up retail interest. Meanwhile, F&B and
clothing & footwear retailers should consider
opening pop-up stores especially those testing
the Metro Manila retail market which is starting
to rebound post-Covid.
2%
Future-proof high-density retail spaces
High-density retail spaces were greatly affected
by Covid lockdowns. Now that restrictions have
eased and consumers are starting to go out and
gather, Colliers recommends that retailers
continue encouraging social distancing measures
and implementing regular sanitation and other
health and safety protocols. Now is an
opportune time to ramp up marketing of these
high-density retail spaces.
New Supply Vacancy at Year-End (RHS) 20.0%
10.0%
2015 2016 2017 2018 2019 2020 2021 2022F 2023F
2
Tapered new supply
From Q2 2022 to Q3 2022, Colliers recorded the
delivery of 16,000 sq metres (172,200 sq feet) of
new retail space with the completion of
neighborhood malls such as The Shops at Ayala
Triangle in Makati CBD (7,000 sq metres), The
Link at Robinsons Metro East in Pasig City (5,000
sq metres) and Waltermart Novaliches in Quezon
City (4,000 sq metres). In 2022, we see the
delivery of about 356,000 sq metres (3.8 million
sq feet) of new supply, 13% lower than our
previous forecast of 409,000 sq metres (4.4
million sq feet) as some developers pushed back
completion of their projects. From 2022 to 2025,
we see the annual completion of 247,700 sq
metres (2.7 million sq feet). 80% of the new
supply will likely be in the Bay Area and Quezon
City.
Selected upcoming supply (2022-2025)
Quezon
• Greenhills Center
City
Expansion • Bridgetowne Mall
San Juan
• Gateway Mall 2
• One Ayala Retail Makati CBD • Ayala Malls
Bay Area Parklinks
Fort Bonifacio
• Parqal Mall
• SM Mall of Asia
Expansion • Mitsukoshi Mall
Source: Colliers
Marginal rise in vacancy
In Q3 2022, vacancy across malls in the capital
region reached 15.4%, a slight increase from the
15.2% recorded in Q1 2022. Major developers
have been reporting that consumer traffic has
now reverted to 85-95% of pre-Covid levels.
Retailers have also been active in taking up
physical mall space from Q2 to Q3 2022 as they
take advantage of rising consumer traffic
coupled by an anticipated increase in purchasing
power due to the holiday season. Among the
retailers that took up space during the period
include: Skechers and Superga in Powerplant
Mall, Rumba at The Shops at Ayala Triangle, Café
Kitsune at The Podium, Ever New Melbourne at
Trinoma and Yoshinoya at Eastwood Mall.
In our view, the headwinds that will likely hinder
the retail sector’s expansion include supply chain
disruptions, global recession fears, and
persistently high inflation.1 The Bangko Sentral ng
Pilipinas (BSP) or the central bank reported that
Q3 2022 consumer confidence was −12.9%, 7.7
percentage points lower QOQ. However, the
outlook for consumer confidence in the next 12
months turned more optimistic, reaching 33.4% in
Q3 from the from the 32.4% reported in Q2 2022.
Meanwhile, the Philippine Retailers Association
(PRA) is also bullish on the sector’s growth
trajectory despite rising inflation as more
consumers return to physical retail formats.2 The
rise in remittances as well as release of employees’
holiday bonuses should also boost retail spending
in Q4 2022.
Household spending growth per sub-segment
(Q2 2021 vs. Q2 2022)
Q2 2021 Q2 2022
40.0%
35.0% 32.3%
35.0%
30.0%
25.7%
21.7%
25.0%
19.2% 13.7%
20.0% 16.7%
14.1%
15.0% 10.3%
8.5%
10.0%
5.0%
0.0%
Source: Philippine Statistics Authority
Colliers retains its forecast of a 16% vacancy in
2022 from 14.8% in 2021. We attribute the rise to
the completion of 356,000 sq metres (3.8 million
sq feet) of new supply. We project vacancy to inch
up further to 17.0% in 2023 before receding to
14% in 2024.
Slight rise in rents
Colliers recorded a slight uptick in lease rates in
Q3 2022, rising by 0.4% compared to the 1.7%
correction in Q1 2022. In our view, the projected
pick up in retail space absorption and consumer
traffic for the remainder of 2022 should support
the rebound in rents. In 2022, we project rents to
grow by 1%, an improvement following a
combined 15% correction from 2020 to 2021.
1Retail sector optimistic despite inflation | The Manila Times; 2Retailers
still bullish on growth outlook | Philippine News Agency (pna.gov.ph)
3
 For further information, please contact:

Joey Bondoc Richard Raymundo

Associate Director | Research | Managing Director | Philippines
Philippines +63 2 8858 9028
+63 2 8858 9057 Richard.Raymundo@colliers.com
Joey.Bondoc@colliers.com

Martin Aguila Brent Respicio

Senior Analyst | Research | Research Analyst | Research
Philippines | Philippines
+63 2 8863 4116 +63 2 8863 4197
Martin.Aguila@colliers.com Brent.Respicio@colliers.com

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