Mall construction soars in 2013

Aya Lowe
Mall developers are highly confident with their expansion plans due to strong local demand backed by a robust economy

More than 800 square metres of real estate expected over the next three years. Photo by Franz Lopez/Rappler

MANILA, Philippines – Retail developers are looking forward to another good year this 2013 on the back of the country’s robust economic development, which has been driven by consumer spending. 

Real estate consultancy firm Colliers International noted that in Metro Manila alone, roughly over 800,000 square meters (sqm) of retail space are in the pipeline and targeted to be delivered within the next 3 years.

“Overall, developers are highly confident with their expansion plans due to strong local demand backed by a robust economy,” stated Colliers report released on Tuesday, April 30. 

As of the first quarter 2013, stock of retail space in Metro Manila has remained unchanged and still sits at 5.3 million square meters. However, over the rest of the year, 300,000 sqm are expected to be complete.

According to Colliers, it is the highest level of new construction since 2006.

New, bigger malls

SM Megamall and Venice Piazza are currently undergoing expansion with the aim of attracting heavier foot traffic. Both are set to open in the second half of the year.

Other major developments such as SM Aura (133,800 sqm gross leasable area or GLA) and Century City Mall (17,000 sqm GLA) will be built to cater to broader profiles across residential and commercial communities.

Gokongwei-led Robinsons Land Corp. is also set to open 4 new shopping malls this 2013, marking the property developer’s first time to breach the 1-million square-meter mark in terms of GLA for its shopping mall portfolio.

The 4 new malls will be located outside of Metro Manila: Robinsons Place Santiago (Isabela), Robinsons Place Roxas City, one in Butuan (in Mindanao) and one in Malolos (Bulacan). 

In January 2013, Frederick Go, president of the Philippine Retailers Association (PRA) and of Robinsons Land Corp predicted that the retail industry would see a double-digit growth this 2013, driven by the growth of the robust outsourcing sector and remittance inflows, which drive consumer spending.

Go said he was expecting the boost to come from a rise in retail sales from the upcoming midterm elections. “We are also already in an election year and as generally believed, election years are always good for the retail or general consumer industries. So I think we have a lot of reasons to be optimistic about the retail industry in 2013.”

As the retail landscape develops, retail developers are expected to introduce new formats and configurations to meet the demands of an increasingly competitive and expanding market size says retail consultancy firm Colliers International.

BPO-retail integrated facilities are also expected to expand. The Anonas LRT City Center in Quezon City is slated for completion in 2Q 2013.

Vacancy, rental rates

Decreasing vacancy rates across retail space shows that demand is there. Vacancy rates in both super-regional and regional malls decreased by 2.15% in the first quarter of 2013.

Occupancy rate slightly increased to 97.8% from the 97.4% in the previous quarter.

However, compared to the first quarter of 2012, occupancy rates have been slightly down by 1.14%. This is due to the increased space that has come from recent mall expansions.

According to Colliers, higher retail occupancy levels are also supported by the growing BPO and tourism industries, which drive the purchase of consumer goods.

Rental rates in Ayala Center increased by a marginal rate of 0.6% to an average of P1,278 per sqm.

Meanwhile, rental rates in Ortigas Center improved by 0.5% to average P1,100 per sqm.

Rental rates in both districts are projected to grow between 5% and 6% in the next 12 months. – Rappler.com