(Source: Sunstar | March 26, 2018)
There remains a healthy play of traditional and online stores in the Philippines today, amid reports that brick-and-mortar outlets are on the way out in other countries.
Joey Roi Bondoc, research manager at Colliers International Philippines (Colliers Philippines), said brick-and-mortar stores can still coexist with online retail in the Philippines, as malls are the Filipinos’ version of parks.
“Malls are venues where people hang out with their families. Because we don’t have parks unlike in other countries, we consider malls our parks,” said Bondoc, adding that this is the reason mall operators are investing heavily on differentiation to increase foot traffic even as online shopping gains popularity.
“Malls are busy differentiating themselves from the others. Aside from that, they are acquiring innovative tenants,” he said.
Bondoc cited the opening of Robinsons Galleria Cebu’s PlayLab, the first digital playground in the Philippines, which features 14 interactive and education attraction for kids and the young at heart, as an interesting addition to the mall’s tenant mix that aims to invite more families to visit the mall.
While rapid expansions are seen in large and medium retail formats, Collier Philippines advised homegrown players to think of new ways to please consumers with evolving tastes.
It suggested they recalibrate their offerings if they are to stay in the game.
“Housing more innovative tenants will play a major role in attracting more customers,” said Bondoc, who was in Cebu last week to deliver a real estate briefing for members of the Canadian Chamber of Commerce-Cebu Chapter.
Metro Cebu remains the largest retail hub outside of Metro Manila, said the research firm.
As of last year, Cebu’s retail stock reached 1.06 million square meters (sq.m). Super-regional malls or outlets with gross leasable area (GLA) of more than 100,000 sq.m. account for about 60 percent of Cebu’s retail stock. These malls are SM Seaside, SM City Cebu, and Ayala Center Cebu.
Retail outlets (50,000 sq.m to 99,999 sq.m) such as SM Consolacion and Robinsons Galleria Cebu cover 10 percent of the market. Smaller district centers (25,000 sq.m to 49,999 sq.m) and neighborhood outlets (below 25,000 sq.m) located primarily in the downtown cover 30 percent.
Overall vacancy in the fourth quarter of 2017 reached 4.2 percent. Cebu, according to Colliers Philippines, had its vacancy peak in 2015 at 14.5 percent. Super regional and regional malls recorded vacancies of 6.4 percent and 4.5 percent, respectively.
Workers employed in industries that receive high salaries like in IT, business process management and knowledge process outsourcing firms are driving the expansion of Cebu’s consumer base. Families of overseas Filipino workers (OFWs) also contribute to high spendinvels.
Tourist spending is also expected to increase with the opening of the Terminal 2 of the Mactan-Cebu International Airport sometime in July.
“Mall operators should be on the lookout for potential retail spaces near resort-oriented hotels and condominium projects,” it said.
Colliers Philippines noted they do not see a significant rise in vacancy over the next 12 months despite the projected full turnover of NorthDrive retail complex and the partial opening of II Corso mall at the City di Mare.
It projected overall vacancy to hover between five and six percent this year. An estimated 80 percent of incoming retailers are into food and beverage.
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