HOLIDAY spending is expected to bring some much-needed cheer to Philippine mall operators and retailers, according to Colliers Philippines.
In a Oct. 27 report, Colliers said major mall operators are now reporting that foot traffic is now at 85-95% of 2019 levels.
“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,” Joey Roi Bondoc, Colliers associate director for research, said in the report.
In anticipation of more consumer traffic ahead of the holiday season, Colliers noted that many retailers took up more physical mall space in the third quarter. For instance, Skechers and Superga opened in Rockwell’s Powerplant Mall, while Ever New Melbourne opened in Ayala’s Trinoma mall.
Collier said food and beverage, and clothing and footwear segments still dominated the physical space take-up in the third quarter.
At the same time, mall vacancies are still expected to go up to 16% by end-2022. Vacancy in Metro Manila malls inched up to 15.4% in the third quarter, from 15.2% in the first quarter of 2022.
“We attribute the (vacancy) rise to the completion of 356,000 square meters of new supply. We project vacancy to inch up further to 17% in 2023 before receding to 14% in 2024,” Collier said.
Collier said vacancy rates are expected to improve by 2024, which will raise leasing rates.
Mall leasing rates inched up 0.4% in the third quarter, and are expected to rise 1% by yearend, Collier said, a reversal of the combined 15% decline from 2020 to 2021.
Amid rising inflation, Colliers said mall operators and retailers should keep a close eye on retail segments that may be most affected by higher prices and those that will be able to withstand the impact.
Developers should also reassess the ideal sizes for upcoming retail outlets, as well as use their event spaces and activity centers for events that will attract more consumers.
“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,” Colliers said. — Cathy Rose A. Garcia