Colliers: Retail space vacancy back to prepandemic level by 2026
Brick-and-mortar retail space vacancy across the country will likely ease to prepandemic levels by 2026 as foreign brands, particularly in the home furnishing sector, flock to both new and existing malls.
Real estate broker Colliers Philippines found in its First Quarter Metro Manila Retail Report that the vacancy rate in malls had improved to 13.1 percent from 15.1 percent in the third quarter of 2024.
This represents the sector’s lowest vacancy rate since the first quarter of 2021, during which it was at 13.8 percent. By the end of 2025, this is expected to ease to 13 percent due to limited new supply anticipated for the rest of the year.
With both existing and foreign retail brands looking to expand their physical stores and absorb mall space, Colliers is projecting vacancy rate to recover to prepandemic levels, or around 10 percent, by next year.
“We attribute this to greater absorption of mall space (due partly to take-up from large retailers, including foreign home furnishing brands) and managed level of new retail completion,” Colliers research director Joey Bondoc said.
Bondoc also cited a “more favorable retail environment” in the country as a crucial factor to retail recovery. Slowing inflation has boosted the spending power of consumers, thus improving brand confidence.
Home furnishing brands have been particularly aggressive in their expansion, with IKEA, Anko, Flying Tiger and Nitori branches sprouting in popular malls.
Food and beverage retailers are also projected to cover about 45 percent of newcomers that will occupy new mall space in Metro Manila over the next year.
At the same time, Colliers noted that increased investments in mall renovations could contribute to space absorption.
According to the company, mall developers have been earmarking up to P21 billion to improve their retail spaces and attract more brands.
Redevelopment
Ayala Land Inc. (ALI), for example, is pursuing a P13-billion redevelopment of its flagship malls: TriNoma in Quezon City, Greenbelt and Glorietta in Makati City, and Ayala Center Cebu.
Mariana Zobel de Ayala, ALI leasing and hospitality head, said during their annual stockholders’ meeting last week that renovations in TriNoma would be completed by the third quarter of this year. Glorietta will follow in 2026.
Colliers pointed out that developers needed to “aggressively promote their renovated spaces and entice more mallgoers to stay longer and spend more within retail centers.”
In the next two years, 158,300 square meters (sq m) of new retail space will open, up from Colliers’ previous forecast of 132,700 sq m due to redevelopments.
With property firms building more residential projects in the provinces, Colliers also said developers should complement these with a retail component.
Between 2025 and 2028, several malls will open in other parts of the country, including Power Plant malls in Angeles City and Bacolod City, as well as SM and Ayala malls in Cebu, Davao and Iloilo, according to Colliers.
