Revenge shopping and dining to boost retail
Colliers is closely looking at the return of malls as Filipinos’ de facto public spaces, especially now that consumer traffic is reverting to pre-COVID-19 levels, and restaurants and activity centers are starting to welcome more guests.
Aside from revenge shopping and dining which we project to kick in starting 2022, we see more opportunities in the market given mall operators’ and retailers’ propensities to innovate amid a liberalized playing field. Consumer confidence abounds and this should a have a positive impact on mall space absorption and rents in 2022.
Preparation of high-density retail for the return of more customers
In our view, retailers and mall operators should continue implementing strict health and safety protocols despite the easing of quarantine restrictions in Metro Manila.
This is particularly important for high density retail spaces where people usually gather, such as fitness centers, cinemas, foodcourts and arcades. These retail segments suffered significantly since the implementation of strict lockdowns across Metro Manila in March 2020. Public health experts continue to warn of new case surges and this could threaten the much awaited recovery of high-density retail.
Colliers believes that the more relaxed physical distancing protocols and increased consumer traffic bode well for the much-anticipated rebound of this retail segment.
Seize return-to-office opportunities
From 2022 to 2025, Colliers sees about 58 percent of the new retail supply likely coming from major business districts such as Makati central business district (CBD), Fort Bonifacio, Bay Area and Araneta Center.
Colliers encourages retailers to lock in spaces in these locations and capitalize on firms’ implementation of return-to-office (RTO). Meanwhile, retailers with long-term occupancy plans should negotiate for lower lease rates in these business hubs before we see a recovery in rents starting 2023.
Slight improvement in vacancy
By the end of 2022, we see retail vacancy reaching 16 percent, this is slightly down from our previous forecast of a 17 percent vacancy. While this is still higher than pre-pandemic vacancy of between 9 percent and 10 percent in Metro Manila, the slight improvement indicates the start of the slow rebound for Metro Manila’s brick-and-mortar retail segment despite persisting challenges brought about by the popularity of online shopping and potential threats of a new COVID-19 variant.
Slow rental recovery in 2022
In 2022, Colliers sees retail rents slowly recovering by about 1 percent from a cumulative 15 percent drop in 2020 and 2021. In our view, the gradual pick up in retail space absorption by the latter half of 2022 should partly support our projected rebound in lease rates. More retailers will be encouraged to occupy physical mall space as consumer traffic starts to improve.
The business headlines in under one minute
Subscribe to INQUIRER PLUS to get access to The Philippine Daily Inquirer & other 70+ titles, share up to 5 gadgets, listen to the news, download as early as 4am & share articles on social media. Call 896 6000.