Non-traditionals keep retail sector afloat

SPACE occupied by retailers in Metro Maila shopping malls grew on the strength of non-traditional tenants, according to a property research firm.

In its latest Philippine market overview, Colliers International said the country’s retail sector appears to be recession-proof with personal consumption expenditures contributing 70 percent of the country’s gross domestic product (GDP).

An indicator of economic performance, GDP is the amount of final goods and services produced in a country.

The retail sector contributes an average of 12 percent to 15 percent of GDP and is one of the country’s biggest employers.

“One of the indicators that may support the fact that the retail market is indeed recession-proof is mall vacancy,” Colliers said.

The research firm said Metro Manila malls are filled with non-traditional retail tenants such as spas, clinics, leisure and entertainment shops.

With the incorporation of new concepts like these, Colliers said Metro Manila-wide mall vacancy fell to 10.7 percent in the second quarter of this year.

“More demand for various products and services means more occupancy for mall operators,” Colliers said.

It said foot traffic in Metro Manila malls are rising with an estimated 100,000 people daily in major destinations such as SM Megamall, Glorietta and Robinsons Manila.

With the rosy outlook of the retail industry, Colliers said more property developers are constructing district and neigh­borhood malls.

SM, for one, is delving into its own community mall and hypermarket set-up through the Save More brand.

Other mixed-use developments such as the Southgate Tower of Alphaland in Makati and Eton Centris in Quezon City will both have retail components to support their office spaces.

The Sky Garden in SM North Edsa also features open air and landscaped retail stores and restaurants.

Colliers said the current stock of major malls in Metro Manila is 4,959,187 square meters of leasable space.

In the second quarter, rental rates at the Makati central business district (CBD) slightly declined to P1,230 per square meter compared with P1,245 in the previous three-month period.

“The decrease was seasonal and rents are still likely to fluctuate at current levels,” Colliers said, adding that significant drops are not expected because of higher demand for retail spaces.

The average rent for Ortigas Center retail spaces is pegged at P1,000 per square meter but more premium space will fetch around P1,300.

“Rental rates are expected to be stable in the near term as demand remains relatively sound,” Colliers said.

Earlier, Jorge Mendiola, chairman of Philippine Retailers Association, said the industry will grow at the high single digits this year.

He said the industry’s growth would be driven by the strong remittances from Filipino migrant workers as well as growth in the business outsourcing and tourism sectors. –Darwin G. Amojelar, Senior Reporter, Manila Times