Manila’s retail supply pipeline to 'test market resilience': analyst

An estimated 177,000sqm of new supply is expected in H2 2025.

According to a JLL report, retail conditions in Manila are expected to improve in H2 2025 as tenants gear up for the holiday season. Substantial volume of new store openings is anticipated across prime malls, potentially offsetting negative absorption from H1 2025.

“The upcoming 177,000 sqm in H2 2025 is anticipated to test market resilience, though improving consumer sentiment and decreasing borrowing costs should support gradual absorption. Meanwhile, rents are seen to rise by year-end, along with increased leasing activity,” the report added.

Here’s more from JLL:

Net absorption registered at -20,700 sqm in Q2 2025, continuing the downward trend from Q1 2025. The Cities of Mandaluyong and Muntinlupa led the move-outs, while other areas such as Quezon City and Makati City recorded new store openings.

Food and Beverage continued to be the leading category in terms of new store openings. Meanwhile, general retail also emerged as one of the quarter’s top move-ins, demonstrating continued expansion activity.

No new supply recorded in Q2 2025

Retail supply remained static in Q2 2025 as developers positioned completions in H2 2025. About 177,000 sqm of additional space is seen to enter before year-end, where the upcoming supply may exert additional pressure on vacancy rates.

Vacancy rate exhibited an upward trajectory in Q2 2025, reaching 7.5%, up by 33.9 bps q-o-q. The uptick is due to reduced pace of store openings observed throughout the quarter, contributing to higher availability across the market.

Retail financial metrics show marginal growth

Rents showed stability with a marginal 0.5% increase in Q2 2025, reaching PHP 1,759 per sqm per month. Most of the retail operators maintained stable asking rents to sustain demand in the market.

Investment activity stayed measured with capital values showing minimal appreciation at PHP 239,532 per sqm. The central bank’s interest rate reduction to 5.5% in May is anticipated to improve investor confidence and accelerate pending deals as financing costs decrease.