The shopping mall arm of property developer DoubleDragon Properties Corp. has signed 10-year contracts amounting to P4.97 billion for 22 SM Savemore supermarkets that will be set up in each of its additional community malls that will open this year.
The new lease contracts signed by DoubleDragon subsidiary CityMall Commercial Centers Inc. cover only the supermarket lease for the 22 additional CityMall sites that are expected to open within the year, DD said in a statement.
Just from supermarket tenants alone, the 100 CityMalls in the pipeline through 2020 are expected to generate at least P20 billion in rental income in the first 10 years of operations.
“The signing of another 22 SM Savemore Supermarkets to locate in our soon-to-open CityMalls, is a testament to the value of what CityMall is providing to modern retail brands and the relevance of the platform we provide in their expansion into the next frontier of retail,” said Hannah Yulo, chief investment officer of DoubleDragon.
As of end-2017, DoubleDragon has completed 332,500 square meters of leasable space, which is expected to expand to 600,000 sqm by this yearend.
As of the first quarter of 2018, the first 28 operational malls in the portfolio are about 95 percent leased out.
“We now have 28 operational malls, plus the 22 more malls slated for completion this year, we are in line with our goal of having 50 completed malls by the end of this year,” said DoubleDragon chair Edgar Sia II.
DoubleDragon sees two key developments making CityMall’s community malls more relevant to provincial areas: the organic shift from traditional retail to modern retail in third-tier cities and the noticeable penetration of e-commerce in the tier 1 urban areas of the country. These are seen to make expansion into CityMalls more and more critical to modern retail tenants seeking to hedge exposure against the disruptive rise of e-commerce.
DoubleDragon expects the inflection point of these transitions to be felt within the next three years, just in time for the completion of the company’s goal of having a strong network of 100 CityMalls in the provinces.
To date, Sia said CityMall had started to gain significant traction in the countryside.
“For the past three years, DoubleDragon has planted the seeds and necessary groundwork that will enable the company to play a major role in this retail transformation as we continue to expand in what will essentially be the most important market one day as e-commerce continues to disrupt the urban market,” Sia said.
“The business model of CityMall is positioned to remain relevant beyond the age of digitalization because we focus on delivering only basic necessities, and generally, the supermarket, cinema, services and food tenants combined occupy more than 70 percent of a typical CityMall. CityMalls are also conveniently located in provincial city centers within close reach of its market,” he added. —DORIS DUMLAO-ABADILLA