Metro Manila’s retail sector is bouncing back faster than expected, with mall vacancies dropping, rents inching upward and foreign retailers expanding aggressively, according to Colliers International Philippines’ Q1 2025 report. The real estate consultancy firm says the market is on track to return to pre-pandemic levels by the end of 2026 — a clear sign of renewed consumer confidence and retail resilience.
“Colliers is optimistic that Metro Manila mall vacancy will revert to pre-COVID level by end-2026,” said Colliers Research director Joey Roi Bondoc. “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.”
As of the first quarter of 2025, retail vacancy in Metro Manila fell to 13.1 percent, the lowest level since Q1 2021, driven by increased occupancy in newly opened malls like Gateway Mall 2, Opus Mall, One Ayala and the expanded SM Mall of Asia. This marks a significant improvement from the 15.1 percent vacancy recorded in Q3 2024. Colliers expects vacancy to further stabilize at 13percentby the end of this year, supported by limited new supply and sustained consumer traffic.
Foreign brands — especially in home furnishings, clothing and personal accessories — have been leading the charge. Retailers like Nitori, Flying Tiger and Matcha Tokyo are among the newest entrants, joining earlier expansions from IKEA, Anko, and HLA. Food and beverage (F&B) continues to dominate mall space take-up, projected to account for about 45 percent of new leasing over the next year.
The report notes that retail activity surged during the holiday season, and developers have been capitalizing on the momentum by pouring billions into upgrades. SM Prime Holdings has earmarked P21 billion for mall redevelopment, while Ayala Malls plans to spend P18 billion to refresh properties like Glorietta, Trinoma, and Ayala Center Cebu.
This wave of redevelopment is reshaping Metro Manila’s retail footprint. From Q3 2024 to Q1 2025, Colliers recorded 250,000 square meters of new retail space delivered, including the SM Mall of Asia Expansion. Another 270,000 sq. m. is set for completion this year, with Ayala Malls Parklinks, Arca South, and Filinvest Mall Cubao among those in the pipeline.
Beyond the capital, developers are expanding into suburban growth areas, aligning with increased residential activity in places like Cebu, Davao, Iloilo, and Bacolod. Rockwell is set to open Power Plant Malls in Angeles and Bacolod by 2027.
The sector is also being buoyed by easing inflation and monetary policy. In April 2025, the Bangko Sentral ng Pilipinas reduced interest rates by 25 basis points to 5.5 percent. Analysts expect further rate cuts in the second half of the year, which could stimulate even more retail demand.
With improving consumer sentiment and a favorable economic backdrop, Colliers projects sustained rent growth and stronger space absorption in the next 12 to 24 months.