Absorption contracted in Q2 2026

• Net absorption registered at -21,800 sqm in Q2 2026, reflecting increased vacancy and slower leasing activity as some retailers exited to restructure operations and pivot business models.
• Local food and beverage brands led new store openings, leveraging on stable consumer spending to expand their market presence, though F&B also topped closures as operators consolidated underperforming locations.

New retail supply enters the market

• Approximately 26,000 sqm of retail space entered the market in Q2 2026, expanding available inventory. An additional 160,000 sqm is expected to be delivered by the end of the year.
• Overall vacancy rate rose to 5.8% in Q2 2026, up 75.1 bps quarter-on-quarter, reflecting a modest increase as leasing activity softened and new supply entered the market during the period.

Rental momentum drives market performance

• Average retail rents reached PHP 1,783 per sqm per month in Q2 2026, posting a 0.4% quarterly increase and 1.4% annual gain, as demand for prime malls remain solid.
• Capital values reached PHP 243,864 per sqm in Q2 2026, up 0.3% from the previous quarter driven by sustained retailer interest in the sector.

Outlook: Moderate market expansion continues

• New retail space will be led by F&B, clothing and apparel, and general retail as mall operators prioritize high-performing categories that drive sustained foot traffic and tenant engagement.
• Rental rates are projected to see modest gains through year-end, supported by improved occupier activity, though the incoming supply pipeline may temper pricing power as landlords compete for quality tenants.