Manila prime retail vacancy rate increases to 7.2% in Q1

Blame it on the slower pace of new openings.

The retail supply in Manila remained unchanged in Q1 2025 according to data from a JLL report, with no new shopping malls opening their doors. Moving forward, the market anticipates a significant influx of approximately 160,000 sqm of new retail space slated for completion in the coming quarters.

“Vacancy rates rose slightly in Q1 2025, reaching 7.2%, up by 6.9 bps q-o-q. The increase can be linked to the slower pace of new openings. However, the steady influx of tenants in retail malls near business districts helped stabilise demand in the market,” the report said.

Here’s more from JLL:

Net absorption turned negative in Q1, settling at -4,200 sqm due to post-holiday store closures and slower move-ins. However, new openings persisted in key cities such as Pasay, Makati, Taguig and Quezon City, partially offsetting the closures.

The Food & Beverage (F&B) sector remained a primary driver of new store openings. The continued expansion of F&B outlets in malls near CBDs contributed to stabilising occupancy levels despite the overall negative absorption.

Retail indicators show stability amid seasonal market fluctuations

Retail rents averaged PHP 1,751 per sqm, per month. To retain demand and entice renters, operators kept their rates unchanged.

Retail sector investment remained stable, with capital values steady at PHP 238,674 per sqm. The central bank’s decision to keep interest rates at 5.75% in February fostered a good investment climate, potentially boosting real estate deals in upcoming quarters.

Outlook: Retail market may be tested amid seasonal shifts and new supply

The retail sector may face pressure from a lean season and upcoming supply. However, planned store openings signal market resilience. Continued leasing activity may stabilise vacancy rates despite the expected notable increase in retail space in the coming quarters.

Rents are expected to remain stable as operators aim to stimulate demand. Some malls are in renovations to boost consumer experience. The upgrades may lead to higher rents in the medium-term, as improved facilities may increase the perceived value of leasable space.