Shopping malls: evolution and their role in property developmentNovember 3, 2011 / By
To every average Juan (colloquial term for Filipino), what signals the start of progress in a location is the opening of a shopping mall in the vicinity. This belief has merit. Even developers see the birth of a shopping mall in an area as a signal to start investing in properties in the area. Of course at times there may already be some development activity prior to this, but activity is heightened by the presence of the retail centre. Residential communities and business centres will shortly be seen clustering around the shopping mall, rippling outwards to form a virtual centre of economic activity.
Filipinos’ penchant for malls is justified by approximately 11.5M sqm of shopping mall space in the market, not to mention the fact that three of the largest malls in the world are located in the country. The Philippine retail property sector has evolved over the years from the basic walled-in structure lined with shops along its corridors to open lifestyle-centreed or free-standing shops within a single complex.
The first shopping mall in the country was constructed in Manila, and the formula used for this development was improved by the largest shopping mall developer in the country, SM Prime Holdings, Inc. (SMPH) enabling them to construct 42 shopping malls nationwide; 17 of which are clustered in Metro Manila. This contributed heavily to the saturation of the retail market in Metro Manila, allowing other areas to benefit from retail development as well. Owners and operators of these malls have adapted to this type of market, with one of the notable means being leasing out entire levels of the mall to offshoring & outsourcing (O&O) operations.
Another trend in retail developments is differentiation into lifestyle centres. These retail formats have a central theme often revolving around the project’s anchor feature. In the Philippines, lifestyle centres are predominantly health and wellness-oriented, but there are some that also revolve around recreation. These types of developments, though, are seen in highly developed areas where there is stiff competition existing among several retail centres.
Even with the current pace of property development in the Philippines, there are still many areas untapped by developers and this may indicate that the classic mall format can still sprout up just about anywhere. Hence, howsoever differentiated retail formats have become, the classic shopping mall will always have a following and will play an essential role in clustered property developments.
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