Malls are traditionally places where we shop and dine out. However, these retail spaces have evolved into something much more today as a lot of Filipinos are no longer just heading to malls to just buy something but also to look for spaces where they can roam around or create memories with their loved ones. This is something that developers have responded to in the newer malls in the market.
“If you look at more of the new developments that are completed, they have more… they have more spaces for common spaces. So you have more room for roaming around,” Cushman and Wakefield Philippines director for research, consulting, and advisory services Claro Cordero said.
Some examples of these mall developments with common areas would be The Meeting Pods on the third level of SM Aura in Bonifacio Global City.
“It’s open space, it’s free space that people can utilize,” Cushman and Wakefield director and head of tenant advisory group Tetet Castro said.
Castro also cited the Top of the Glo in Glorietta in Makati City, which offers mallgoers Japan and Korea-inspired displays where anyone can take pictures at.
“You just have to be there in the mall with your friends or your family, just to socialize, and not necessarily [spend],” Castro added, explaining the current preference of mallgoers.
Supply, preference mismatch
With the evolving preference of Filipino consumers, Cordero acknowledged that there is a mismatch between the current supply of mall spaces in Metro Manila versus what consumers are looking for.
“The challenge though is that a lot of this new supply and the existing supply that we have right now will be again, relatively mismatched with what the consumer or the shoppers are looking for,” Cordero said.
“So if we focus on consumer experience or the shopping experience, then definitely we have a lot of things to work on. A lot of things to catch up for the retail market in the Philippines, so particularly the Metro Manila submarket,” Cordero added.
The latest data from Cushman and Wakefield showed that a total of 340,000 square meters of new retail supply is expected to be completed this year.
Cushman and Wakefield stressed that focusing on consumer experience is the key to creating a strong brand and keeping loyal customers.
Varied recovery for the retail sector
Just like other property sectors such as the office and residential segments, the retail market was not spared of the impact of the pandemic in recent years which resulted in delays.
“So you can see a lot of these pocket retail developments that were supposed to be completed, but we’re seeing, again, some delays in those locations,” Cordero said.
He explained that the recovery trajectory of the retail market will vary across retail districts.
“Prime shopping centers will stabilize primarily because they are the first ones also to reinvent themselves,” Cordero said.
He emphasized that the key for the retail segment is reinvention.
“If you look at delivery of new retail supply, we’re seeing an elevated we’re seeing an elevated supply projection in the next two to three years, and that’s because a lot of these redevelopments will also entail additional floor spaces or retail spaces in the market,” Cordero said.
Quezon City to see most opportunity from reinvention
Data from Cushman and Wakefield showed that the mature retail markets in Metro Manila are those located mostly in central business districts. Among these are Makati, Taguig, Mandaluyong, and Pasay City to a certain extent.
Cordero noted that these markets have been exhibiting a high density of commercial developments.
“As we move outside of the main CBD, you look at the likes of Caloocan, to a certain extent even Quezon City and you have Muntinlupa and Paranaque, they are the ones that have significant that still have significant capacity to absorb all these new retail developments,” Cordero explained.
In particular, Cordero highlighted the case of Quezon City, noting its ability to absorb new developments due to the reinvention trend.
“Quezon City has that opportunity. If you look at the existing stock, it’s more or less, you know, half of that stock needs a lot of reinvention,” Cordero said.
Aging retail developments are those that are more than 20 years old. Cordero noted that these aging developments face challenges in competing effectively in terms of being able to capture consumer experiences.
“These older retail developments are experiencing low traffic, traffic, low foot traffic, again, due to their inability to adapt to what will be the next normal in retail, Cordero said.
Aside from Quezon City, other areas with a high concentration of aging retail supply include Makati, Mandaluyong, and Manila.
With the evolving consumer preferences in terms of retail developments, Cushman and Wakefield noted that redevelopment of aging retail spaces is key in meeting consumer demands.
