RETAIL spaces are seen to make the fastest recovery in the property market due to the reopening of the economy and eased mobility restrictions, according to Colliers Philippines.

“Retail will be the fastest rebound in the property sector, with sales returning to pre-pandemic levels,” Colliers Philippines Managing Director Richard T. Raymundo said in a briefing on Thursday.

“We’re seeing greater consumer traffic, with mall operators saying that 60% of mall traffic is back… so that should be positive for mall space absorption,” Colliers Associate Director Joey Roi H. Bondoc said.

In its first-quarter report, the property consultant said that it is anticipating revenge shopping, which will fuel the growth in the retail sector.

“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 levels and restaurants and activity centers are starting to welcome more guests,” the report read.

“Aside from revenge shopping and dining, which we project to kick in starting the second quarter, we see more opportunities in the market given mall operators’ and retailers’ propensities to innovate amid a liberalized playing field,” it added.

Colliers projected new supply to reach 409,000 square meters (sq.m.) in 2022. From 2022 to 2025, it sees the annual delivery of about 250,500 sq.m. of new supply.

Among the sectors, it sees Food and Beverage (F&B) retailers leading physical space take-up for the remainder of 2022.

“We project demand from non-F&B segments such as clothing and sports apparel will be picking up,” it said.

From 2022 to 2025, the firm projected the completion of new retail space in business districts such as Makati CBD, Fort Bonifacio, Bay Area and Araneta Center, which will likely cover 58% of the new supply.

In the first quarter, retail vacancy continued to rise albeit at a slower pace in Metro Manila at 15.2%.

“Despite the threat of the Omicron variant and low consumer traffic in January 2022, some retailers have announced store openings in selected super-regional malls,” Colliers said.

By the end of the year, the firm expects retail vacancy reaching 16%, which is slightly down from its previous forecast of a 17% vacancy.

“While this is still higher than pre-pandemic vacancy of between 9% to 10% in Metro Manila, the slight improvement indicates the start of 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 variant,” the property consultant said.

In terms of retail rent, Colliers said it sees this slowly recovering by about 1% from a cumulative 15% drop in 2020 and 2021.

It said that the gradual pickup in retail space absorption by the latter half of 2022 should partly support the projected rebound in lease rates, as more retailers will be encouraged to occupy physical mall space as consumer traffic starts to improve.

“Colliers sees a pickup in discretionary spending as consumer confidence improves and footfall in malls reverts to pre-COVID levels. The election-related spending should partly contribute to a hike in household expenditures leading to the May 9 national polls. With the enactment of Retail Trade Liberalization and Foreign Investment Acts, we expect the entry of more foreign retailers,” Mr. Bondoc said.

“This should chip in to greater retail space take-up, a further diversification of offerings, and differentiation amongst mall operators which should eventually redound to the benefit of Filipino consumers,” he added. — Luisa Maria Jacinta C. Jocson