Retail vacancy level seen to rise double digits

Vacancy levels in the Metro Manila retail market are seen to further increase 10 to 11 percent this year due to the significant amount of new supply as well as closure of a number of luxury retail stores.

In its first quarter property briefing for the year, Colliers International Philippines said vacancy levels in the metro’s retail market went up to 7.3 percent from seven percent in the third quarter of 2016.

“Vacancy levels are increasing across all retail formats,” Colliers International research manager Joey Roi Bondoc said.

Bondoc said the smaller retailer formats were affected by rising vacancy rates as several luxury fashion outlets in a couple of district and neighborhood malls have closed down.

He added one of the issues contributing to the higher vacancy levels is the diminishing uniqueness of mall tenants, as malls in Metro Manila offer almost all the same retail brands.

“Amid increasingly generic retail offerings, curation of retail concepts and tenant mixes are becoming more important,” Colliers said.

Apart from the need for a better tenant mix, Bondoc said the significant amount of new retail supply that recently entered the market had also impacted rising vacancy levels.

Colliers said six new malls opened in the past six months in Metro Manila, which added an estimated 185,000 square meters of gross leasable area. Metro Manila’s retail stock totaled to 6.5 million sqm.

Of the new completed malls, three were in the neighborhood mall format, while two were in the district center format and only one in the regional format.

An additional 500,000 sqm of retail space are projected to be added to Metro Manila’s stock this year.