Revenge spending to extend into 2023

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Photo from: Business World

By Business World

Mall operators should brace for more foreign and local retailers as consumer confidence and foot traffic pick up this year.

Major mall developers have been reporting that consumer traffic has now reached between 85%-95% of pre-COVID levels in the third quarter of 2022 from only 40% a year ago.

In 2023, we see more retailers (foreign and local) taking up physical mall space to take advantage of rising consumer traffic and anticipated increase in purchasing power.

Colliers sees the approval of the amendments to the Retail Trade Liberalization Act (RTLA) as paving the way for the entry more foreign retailers in the country. Based on our mall scans, the food and beverage (F&B) segment will account for 50% of the upcoming retailers followed by fashion accessories and beauty and health at 27%.

Colliers recommends that mall operators reactivate their event spaces or activity centers by organizing events such as trade fairs, exhibits and concerts to attract more mallgoers. F&B and clothing & footwear retailers should also consider opening pop-up stores, especially those testing the feasibility of the Philippine retail market.

We also encourage mall operators and retailers to continue implementing regular sanitation and other health and safety protocols, especially in high-density retail spaces.

In 2023, we see vacancy marginally rising to 17% from a projected 16% vacancy in 2022 due to the substantial delivery of 448,900 square meters (sq.m.) (4.8 million square feet) of new supply. Despite record-high new supply, we expect greater retail space absorption from brick-and-mortar shops following the improved consumer traffic as reported by mall operators and the consumer confidence index of the Philippine central bank.

Colliers encourages developers to reassess the ideal sizes of upcoming retail developments as they welcome more consumers back to their properties.

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