Metro Manila retail shifts to premiumization as vacancy eases

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Metro Manila retail premiumization

Highlights

Metro Manila retail vacancy decreased to 10.8% in Q1 2026 from 11.4% in Q3 2025, driven by foreign food, beverage, and accessory tenants absorbing mall space.
Colliers forecasts year-end 2026 vacancy at 10.2%, but anticipates delayed return to pre-pandemic levels until H1 2027 due to Middle East crisis and slow suburban absorption.
National mall developers shift strategy towards premium, experiential formats, evidenced by projects like Power Plant Mall Angeles and SM Harrison, and increasing large-format foreign flagship stores.

Refurbishment drive supports leasing recovery

As reported by BusinessWorld Online, mall operators in Metro Manila continue to renovate and reposition retail assets as demand improves across the capital region. Colliers Philippines says developers that refreshed their properties during the COVID-19 pandemic are now benefiting from stronger shopper traffic, with some retailers and landlords reporting footfall above pre-pandemic levels.

Retail vacancy in Metro Manila falls to 10.8% in the first quarter of 2026 from 11.4% in the third quarter of 2025. From the fourth quarter of 2025 to the first quarter of 2026, foreign food and beverage and personal accessory retailers absorb substantial mall space, helping support leasing activity.

Colliers projects year-end vacancy at 10.2%, backed by steady demand and limited new supply. However, the property services firm says external pressures, particularly the Middle East crisis, are likely to delay a return to pre-pandemic vacancy levels until the first half of 2027, while newer mall space in areas outside major business hubs records slower absorption over the past 12 to 18 months.

Premium concepts reshape mall strategy

National developers are taking a more aggressive approach to premiumization, moving away from conventional mall formats toward more curated and lifestyle-oriented retail environments. Upcoming projects including Power Plant Mall Angeles in Pampanga, Robinsons Bacolod, SM Harrison in Manila, and SM Nuvali in Laguna reflect that shift.

Colliers also says the trend is reinforced by the expansion of foreign brands, some of which are taking larger physical footprints for flagship stores and experiential layouts. Metro Manila malls are also seeing more foreign home furnishing and personal accessory brands, while some retailers are adding cafés to their stores to help drive traffic.

Developers are putting greater emphasis on experiential retail as consumers seek more than transactional shopping. Features such as pickleball courts, hybrid libraries, and wellness facilities are being introduced to differentiate properties, and Colliers says landlords that adapt to changing preferences with premium and immersive concepts are better positioned to capture higher footfall and a larger share of consumer spending.

Mall of Berlin lenders explored a potential sale of about €550 million in debt while the owners pursued refinancing, underscoring the pressure on large retail assets with complex capital structures. Our earlier coverage explained how testing investor demand across different parts of the capital stack can help creditors gauge pricing and preserve flexibility if a full or partial debt sale does not proceed.

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