The Philippine retail sector is showing signs of strain as inflationary pressures and global uncertainties push consumers to tighten spending, according to property consultancy CBRE Group.
Immediate impact of economic stress
Maam Argos, head of transaction management and retail services at CBRE Philippines, said retail is typically the first to feel the impact during periods of economic stress, with households becoming more cautious and prioritizing essential purchases.
“Whenever there’s a crisis and inflation is high, retail is immediately affected. Consumers tend to focus on essentials,” she said.
Shifting essential needs
Argos noted that traditional essentials such as food and groceries continue to drive steady demand, benefiting supermarkets and daily-needs retailers. However, evolving consumer behavior—particularly among younger demographics—is reshaping what is considered essential.
“For younger consumers, essentials now include coffee, as well as health and wellness,” she said, pointing to the resilience of lifestyle-driven segments despite broader spending restraint.
Stable rental rates
Despite these pressures, rental rates across retail spaces have remained largely stable, as the full impact of the slowdown has yet to translate into higher vacancy levels.
“For now, we don’t see any immediate change in rental rates. The real impact will come once vacancies start to rise,” she said.
Mall operators, meanwhile, are adapting by refining tenant mixes and focusing on experiential offerings to sustain foot traffic. Food and beverage (F&B) tenants continue to dominate retail leasing, accounting for around 80 percent of activity in many shopping centers.
Rather than clustering F&B outlets in a single area, developers are strategically distributing them across mall spaces to drive movement and increase overall engagement, Argos added.
Resilient foot traffic
Argos also observed that many major malls in Metro Manila remain busy, suggesting that consumer demand has not collapsed despite ongoing economic challenges.
“If you go to major malls, you would think there’s no crisis. Foot traffic remains strong,” she said. Still, she cautioned that this resilience may not be uniform across all retail segments, with discretionary spending likely to face continued pressure if economic conditions persist.
