Net absorption soars as the holiday season sparks a store-opening spree

• Retail space demand surged in Q4 2024, with net absorption hitting approximately 53,200 sqm. The rise was driven by operators expanding for the holiday season. Major cities such as Pasay, Makati, Taguig and Quezon led the way, increasing occupancy rates across the metro.
• The Food & Beverage sector remained a key driver of retail expansion in Q4 2024. A significant boost to absorption came from the newly opened Opus Mall in Quezon City. Meanwhile, store openings in established malls near CBDs also contributed to positive absorption.

The lack of new supply and numerous store openings drove vacancy rates down

• No new retail space was added in Q4 2024 as planned developments had already been completed, stabilising vacancy levels. However, by 2025, around 160,000 sqm of additional retail space is expected to be introduced, potentially challenging the improving occupancy levels.
• Vacancy rates dropped to 7.1% in Q4 2024, a decrease of 89.9 bps. The improvement was driven by widespread store openings across most malls. New developments also saw tenants continuously take up space, further boosting overall retail occupancy.

Retail rents climbed as the peak shopping season commenced

• Retail rents climbed 3.7% in Q4 2024, reaching an average of PHP 1,751 per sqm, per month. This increase reflects a robust leasing market during the peak season, enabling mall operators to implement upward rent adjustments amid strong demand.
• Capital values continued to increase by 2.2% q-o-q to PHP 238,661 per sqm. The uptick reflects ongoing market stability and investor confidence in the retail property segment.

Outlook: Retail market momentum expected to cool after holiday rush

• Continued store openings are anticipated in the short-term, potentially further reducing vacancy rates in existing malls, especially newer ones. However, the pace of openings is likely to be more moderate compared to the recent holiday season surge.
• Post-peak season, mall operators are expected to maintain current rents as leasing activity slows. Capital values are likely to stabilise following the holiday period, as the market normalises.