The SM group of tycoon Henry Sy seeks to boost its revenue stream by further expanding its mature shopping malls, budgeting some P10 billion for the opening of more leasable space in the sprawling Mall of Asia (MOA) and other malls.
After the recent opening of new retail space in SM North Edsa and Megamall, which will likely support a 14-percent revenue growth for the shopping mall group this year, SM will soon begin the expansion of other malls, SM Prime Holdings president Hans Sy told reporters at the sidelines of the inauguration of Mega Fashion Mall at Megamall Tuesday.
Sy said the expansion of MOA would likely start by the third quarter of this year, adding 200,000 square meters in leasable space upon completion in 2016. This will involve the construction of a third level in the two-story shopping mall.
MOA is currently 99 percent occupied and the SM group believes it may soon have to expand horizontally, as earlier anticipated. Thus, structural provisions had long been put in place so additional floors could be added to MOA without disrupting the operations in the lower floors.
Sy said SM would likewise invest in the expansion of its smaller malls like those in Bacolod, Lipa and Iloilo. The expansion will add about 30,000 to 50,000 sq m per mall.
“We are positive on the economy. We don’t wait for the economy to grow for us to expand. We’re looking positively at the economy. Whether the doomsayers say it’s sustainable or not, we think it’s sustainable,” Sy said.
SM has also incorporated business process outsourcing (BPO) office leasing in its business model. Sy said the group would build new BPO buildings as part of the shopping complex in Taytay, Rizal and SM North Edsa. The new office building will rise in areas previously occupied by SM’s warehouse outlet.
“Right now it’s not barely 10 percent (of revenues) but we see good future (for BPO offices within shopping centers),” Sy said.
Including the retail and office expansion, SM Prime chief finance officer Jeffrey Lim said the shopping mall group would spend about P10 billion for expansion in the next two to three years.
But for this year alone, including capital spending for all business segments under the consolidated SM property group, he said expenditures might reach P36 billion, including spending in China.
SM Prime has been continuing building new malls here and overseas, and expanding its land inventory.
The expansion in Bacolod is set to double the size of the SM shopping mall and is targeted for completion by the end of this year, Sy said.