Manila retail demand remains stable despite slower first quarter

Rental growth is expected to hold steady in Q2.

Retail leasing activity moderated in Manila during the first quarter of 2026 following strong year-end performance, although retailer demand remained resilient, according to JLL.

Net absorption totalled 10,435 square metres during the quarter, reflecting the typical post-holiday slowdown after accelerated take-up at the end of 2025.

JLL said the food and beverage sector remained the primary source of new store openings, supported by stable consumer spending and expansion by local brands.

Approximately 11,000 square metres of new retail space entered the market during the quarter, while more than 200,000 square metres of additional supply is scheduled for completion across 2026.

Despite the new supply, the overall vacancy rate held steady at 5.1%, supported by stable demand for both existing and newly completed retail space.

Average retail rents reached PHP1,777 per square metre per month, representing quarterly growth of 0.99% and annual growth of 1.5%.

Capital values increased to PHP243,135 per square metre, up 0.1% from the previous quarter. JLL said investment sentiment received additional support from the Bangko Sentral ng Pilipinas' February interest rate cut of 25 basis points, which reduced financing costs.

Looking forward, JLL expects retailer demand to regain momentum following the first-quarter slowdown, led by a strong pipeline of food and beverage openings. Rental growth is forecast to remain stable through the second quarter, supported by steady demand from both domestic and international brands.