Malls still ‘healthy’ despite slowing consumer spending

Philippine malls’ occupancy levels are still “healthy” despite slowing consumer spending, according to real estate consultancy firm Colliers Philippines.

“Despite slower personal consumption expenditure in 9M (first nine months of) 2025, malls across Metro Manila continue to record healthy occupancy levels,” Colliers said in its Third-Quarter Retail Market Report.

The vacancy rate of malls in Metro Manila stood at 11.4% as of the third quarter, the lowest since the 9.7% recorded in the first quarter of 2020, according to Colliers data.

“We recorded significant take-up from recently completed malls including GH Mall, Gateway Mall 2 and the SM Mall of Asia Expansion,” it said.

Colliers said it is maintaining its forecast that malls’ vacancy rate will likely return to pre-pandemic levels by the end of 2026.

“The Philippine retail scene continues to innovate, effectively exciting mallgoers and foreign brands. With retail spaces becoming more experiential, more Filipinos now go to brick-and-mortar malls and are enticed to stay longer and spend more,” Colliers Philippines Director and Head of Research Joey Roi H. Bondoc said in the report.

Colliers projects mall vacancy in Metro Manila to fall to 9.5% by the third quarter of 2026. By the first quarter of 2027, it expects vacancy rate to ease to 8.2%, surpassing the 9.3% vacancy rate posted in the third quarter of 2019.

Easing inflation and policy rate cuts should support faster consumer spending in malls.

“In our view, the lower-than-expected inflation, holiday-induced spending, slightly improving consumer outlook, and the projected rise in remittances should support retail demand growth,” Colliers said.

Third-quarter gross domestic product (GDP) grew by 4%, its weakest pace in over four years amid muted household and public infrastructure spending. This as a widening flood control scandal dampened investor and consumer sentiment.

In the third quarter, household final consumption expenditure, which accounts for over 70% of the economy, grew by a slower 4.1% from 5.3% in the second quarter. This brought the nine-month average to 4.9%.

“With the holiday season fast approaching, Colliers believes that mall operators and retailers should continue to work with each other to capture holiday-induced spending,” Mr. Bondoc said.

Mr. Bondoc said mall operators and developers should further improve their omnichannel shopping experience, with more customers expected to combine online and offline holiday shopping.

“With retail vacancy nearing and consumer traffic exceeding pre-pandemic levels, we believe that brick-and-mortar stores are far from obsolete — proving that physical stores remain essential to Filipino shopping habits,” Colliers said.

It also cited the growing demand for “experiential” retail and new concepts like sip-and-shop, which would increase take-up in brick-and-mortar spaces.

“A sustained retail space absorption is essential in ensuring that Metro Manila’s mall vacancy reverts to pre-pandemic level by the end of 2026,” Colliers said.

Colliers noted that the country’s biggest mall operators have invested in upgrading their existing malls to cater to growing consumer preference.

For instance, Ayala Land, Inc. allocated PHP 17.5 billion for its mall renovation program, while SM Supermalls earmarked P1HP 50 billion for redevelopments and new malls.

In the first nine months of the year, new retail space in Metro Manila tripled by 204.95% to 265,000 square meters (sq.m.) from 86,900 sq.m. completed last year.

Key retailers that opened during the nine-month period include Anko and IKEA in Trinoma, Pomelo and JD Sports in Glorietta, Muji in Festival Mall, KKV in Lucky Chinatown Mall, Nitori in Eastwood Mall, Zara in Alabang Town Center, Crate & Barrel in Podium Mall, and Funko and Coach in SM Mall of Asia.

Malls’ take-up is expected to reach 502,000 sq.m. by end-2025, Colliers said, driven by foreign retailers occupying wider spaces, demand from food & beverage and fast fashion brands, and the rising popularity of “experiential” retail.

From 2026 to 2028, Colliers expects 111,000 sq.m. of retail space to be completed annually.

Among those slated for completion during the period include Ayala Malls Parklinks, Ayala Malls Arca South, SM Harrison Plaza, Filinvest Mall Cubao, and the SM Megamall redevelopment. — Beatriz Marie D. Cruz