Philippine Retail on the Rise: Key Insights and Recommendations

In a recent report, Colliers projected that the Philippine retail industry will make a full recovery to pre-COVID levels.

The Philippine retail sector is returning to full health. According to research by Colliers, this retail recovery is already visible in 2025 and will continue through the upcoming years. Colliers, a professional services company which specializes in commercial retail services, further says that the retail sector has been reverting to pre-COVID levels. This has already begun to result in lower retail vacancy in Metro Manila and ease lease rates.

Joey Roi Bondoc, Colliers’ Director, Research, said, “Colliers is optimistic that Metro Manila mall vacancy will revert to pre-COVID level by end-2026. We attribute this to greater absorption of mall space (due partly to take-up from large retailers including foreign home furnishing brands) and managed level of new retail completion.”

Economic tailwinds also come into play. Bondoc added, “With a more favorable retail environment supported by slowing inflation, Colliers sees greater physical mall space absorption moving forward and we see developers with massive retail footprint benefiting from the segment’s robust growth prospects.”

Factors Behind Retail Recovery

To summarize the report, Colliers sees the following trends emerging:

• Foreign retailers are driving retail growth. In particular, this includes retailers from the home and furnishing segment as well as clothing and footwear. The food and beverage (F&B) segment will continue to dominate mall space take-up as it has in previous years.

• Colliers sees a slowdown in the completion of new supply of retail space. It cites that developers are redeveloping existing malls across the capital.

• With this slowdown, retail vacancy is expected to improve. Colliers recorded a notable increase in openings across recently completed malls. The company expects vacancy to remain stable with projected limited new supply in the second half of 2025.

• A favorable economic environment is fuelling the retail recovery. In April 2025, the central bank reduced interest rates by 25 basis points. Colliers believes that additional rate cuts–which analysts expect in the second half of 2025–and easing inflation, will support demand in the retail sector.

Retail Giants’ Continued Development Is Reinventing the Industry

Major retail developers are also significant contributors to the retail recovery. They have continued to build new malls throughout the country as they redevelop existing ones. 

In particular, retail giants such as SM Supermalls and Ayala Malls have both dedicated a portion of capital expenditures to continued development. SM Prime Holdings, the holdings company of SM Supermalls, allotted PHP 21 billion for its expansion in Metro Manila and the rest of the country. 

In our recent interview with Steven Tan, the SM Supermalls President said, “A lot of our expansion is done outside Metro Manila.”  Addressing the transformation of the retail industry, he continued, “The design and how we do our shopping centers is completely different now. There’s a lot of new spaces and new design and new development that’s happening. The shops are also more experiential.”

SM’s new and redeveloped mall spaces are led by the recent completion of the SM Mall of Asia Expansion in the Bay Area. This 2025, SM Megamall will also complete redevelopment, providing an additional 270,000 square meters of mall space.

Ayala Malls, meanwhile, has invested PHP13 billion for redevelopment. Some of the malls that are scheduled for completion include Ayala Malls Parklinks, Ayala Malls Arca South, Filinvest Mall Cubao and the Glorietta and Greenbelt redevelopments.

Recommendations for Businesses 

The retail recovery that is currently happening is undoubtedly good news for businesses across the country. For businesses involved in retail, retail development, and related industries, Colliers has the following recommendations:

1. For developers, maximize refreshed mall space within and outside Metro Manila.

2. For retailers, take advantage of popular consumer segments growing within the industry, such as the home and furnishing segment.

About Colliers

Colliers is a leading global diversified professional services company, specializing in commercial real estate services, engineering consultancy and investment management. It operates in 70 countries, with 22,000  professionals providing services and expert advice to its clients.