WORK WHERE YOU SHOP

Colliers International Philippines believes that a major opportunity for local mall developers is the housing of flexible workspaces.

Colliers has observed that flexible workspace operators are continuously looking for space across Metro Manila. But with office vacancies currently hovering between 0.5 percent and 1 percent in prime locations such as Makati central business district and the Bay Area, these operators have been scrambling to find suitable space.

Valuable opportunity

A research by Colliers USA entitled “Retail’s Newest Tenant: Coworking—work Where You Shop” noted that flexible workspaces have the potential to drive consumer traffic and, consequently, revenue spend to in-mall shops and restaurants.

More than two-thirds of the respondents said a coworking space located in a mall would encourage them to visit shops more often—for restaurants, the figure is 73 percent. The poll noted that almost a quarter said that a coworking space in a mall means they may spend more money inside the mall. Colliers believes that “work where you shop” is a proposition that mall operators and retailers should seriously consider.

The report further noted that “in today’s digitally connected world, we are seeing a growing trend of remote workers and empowered employees deciding where and how they want to work. This has created a valuable opportunity for developers to attract co-working companies to retail centers. It appears to be a win for both sides. Landlords are now embracing a more holistic approach to fill their vacancies and increase foot traffic, while remote workers have access to a flexible and amenity-rich environment.”

Additional retail space

In Metro Manila alone, we see the development of about 1 million sqm of new leasable retail supply over the next three years, as mall developers continue to open new malls and expand existing ones

In our opinion, this is due to the developers’ confidence in Filipino purchasing power and the domestic economy that has been expanding on the back of increasing remittances from overseas Filipino workers, (OFWS) outsourcing revenues and tourist expenditures.

Data from the Bangko Sentral ng Pilipinas showed that money sent in by Filipinos working abroad grew by 3.9 percent to $24.6 billion (roughly P1.28 trillion) in the first nine months of the year, from the $23.7 billion (about P1.23 trillion) received by Filipino households during the same period in 2018.

OFW remittances covered about 10 percent of the Philippines’ annual economic output. While a portion of the annual remittances is often set aside for the amortization of condominiums in Metro Manila as well as house-and-lot units outside the capital region, a substantial portion of this is usually allocated on retail expenditures.

Meanwhile, Colliers said it sees Metro Manila’s flexible workspace growing primarily due to the increasing number of micro, small and medium enterprises (MSMES); the influx of multinational corporations and outsourcing firms looking for plug-and-play offices; and the implementation of a set of policy reforms likely to improve the Philippines business climate such as the Startup Innovation Act.

Landlords are now embracing a more holistic approach to fill their vacancies and increase foot traffic, while remote workers have access to a flexible and amenity-rich environment