ALL OVER Metro Manila, property developers are aggressively refurbishing retail spaces. Despite concerns about elevated inflation and slower economic growth, mall developers continue to renovate spaces and try to capture demand from a Philippine market that is primarily fueled by household consumption.
Even at the height of the pandemic, developers were active in refreshing mall spaces. Colliers Philippines believes that mall operators that were proactive at the height of the coronavirus disease 2019 (COVID-19) pandemic are now reaping the benefits. Mall developers and retailers are even reporting that consumer traffic now is even greater compared to pre-COVID-19 levels.
EASING VACANCY
Retail vacancy in Metro Manila continues to improve, dropping to 10.8% in the first quarter (Q1) of 2026 from 11.4% in the third quarter (Q3) of 2025. From the fourth quarter (Q4) of 2025 to Q1 2026, foreign food and beverage and personal accessory shops took up massive mall space across the capital region during the period.
Year-end vacancy is projected to reach 10.2%, supported by steady demand and limited new supply. However, due to external headwinds — particularly the Middle East crisis — the return to pre-pandemic retail vacancy will likely be pushed back to the first half (H1) of 2027, indicating a slower and more cautious retail recovery despite the overall positive trend. Colliers also saw slower absorption of new mall spaces completed in the peripheries of major business hubs over the past 12 to 18 months.
CONTINUED PREMIUMIZATION OF RETAIL
National developers have taken an aggressive stance in shifting towards premiumization. Upcoming developments such as the Power Plant Mall Angeles in Pampanga, Robinsons Bacolod, SM Harrison in Manila, and SM Nuvali in Laguna reflect a move away from conventional mall models toward a more curated, lifestyle-oriented retail environment.
On the other hand, Colliers is also seeing premiumization being reinforced by the aggressive expansion of foreign brands, with some taking up massive physical mall space to accommodate their flagship concepts and experiential layouts. Metro Manila malls are seeing a rise in foreign home furnishing and personal accessory brands taking up massive physical mall space. We are also seeing a number of retailers complementing their shops with cafés which act as foot traffic drivers.
MORE EXPERIENTIAL, LESS TRANSACTIONAL
In 2025, major developers also reported an increase in consumer traffic. These developers attributed the increase in consumer traffic to new attractions and refreshed tenant mix across their malls. In our view, there is also a growing need to integrate experiential and immersive retail to draw in shoppers.
We see more mall developers embracing differentiation and premiumization. Some developers have introduced features such as pickleball courts, hybrid libraries, and other wellness facilities to enhance the overall mall experience. Colliers believes that malls that evolve with shifting consumer preferences and invest in differentiated concepts are better positioned to achieve greater footfall.
RETAIL’S RECOVERY POST-2026
Even amid elevated inflation, geopolitical uncertainty, and slower economic growth, Metro Manila’s retail sector continues to prove its resilience. Across the capital region, mall developers are aggressively refurbishing and repositioning their properties, banking on the strength of a consumer-driven economy where household spending remains a key growth engine. The strategy appears to be paying off.
Consumer traffic has rebounded strongly, foreign retailers are expanding, and vacant spaces continue to be absorbed. More importantly, malls are evolving beyond traditional shopping destinations, embracing premiumization, experiential concepts, and lifestyle-focused offerings that reflect the changing preferences of today’s more discerning Filipino consumers.
As Philippine mall culture continues to evolve, mall operators and retailers that continue to invest in premium, experiential, and differentiated retail concepts are likely to capture a larger share of consumer spending. As shopping destinations become lifestyle hubs rather than purely transactional venues, premiumization is set to remain the defining growth strategy for Philippine retail.
Joey Roi Bondoc is the director and head of Research of Colliers Philippines.