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Anticipating holiday spending: Malls, retailers cash in as consumer traffic rises - BusinessWorld Online

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FILIPINO consumers’ propensity to shop and visit brick-and-mortar malls is starting to rebound. We now see the resurgence of high-density retail segments such as family entertainment centers, and this should result in greater traffic in malls.

Many mall operators are reporting that consumer traffic is starting to return to 2019 levels. Colliers sees holiday-induced spending further propping up the sector and supporting a slight rise in rents through end-2022. More retailers are now willing to take up physical space, which should bode well for retailers and mall operators. We are optimistic that vacancy will improve by 2024 and this should lift mall lease rates.

In 2022, we expect the delivery of about 356,000 sq.m. of new supply, 13% lower than our previous forecast of 409,000 sq.m. as some developers pushed back completion of their projects. From 2022 to 2025, we see the annual completion of 247,700 sq.m. Of the new supply, 80% will likely be in the Bay Area and Quezon City.In the third quarter, vacancy across malls in the capital region reached 15.4%, a slight increase from the 15.2% recorded in the first quarter.

In our view, the headwinds that will likely hinder the retail sector’s expansion include supply chain disruptions, global recession fears, and persistently high inflation. Meanwhile, the Philippine Retailers Association is also bullish on the sector’s growth trajectory despite rising inflation as more consumers return to physical retail formats. The rise in remittances as well as release of employees’ holiday bonuses should also boost retail spending in the fourth quarter.

 

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