Shopping malls in the Philippines have been hit hard by COVID-19 as lockdowns have prevented people from visiting. Once bustling shopping complexes are now empty ghost towns. And with the country struggling to get the pandemic under control, it remains to be seen when malls can return to normal.
This is cause for concern. Some of the country’s largest property developers, including SMDC and Ayala Land, are needing to do something with their currently empty mall space. According to Colliers International Philippines, Metro Manila and the surrounding areas have a staggering 7.3 million square meters of retail space.
“During the (first lockdown), demand for industrial and logistics space rose for essential goods. In the following months, we expect demand to be more stable compared to the other real estate sectors. This demand is encouraged by the shift to e-commerce and the subsequent effects on demand for logistics, cold chain, warehouse, and other industrial services,” Kash Salvador, Santos Knight Frank Associate Director of Investment & Capital Markets, said.
Philippine shopping malls get new life
SMDC, via SM Prime, has already begun leasing out space in its mall car parks for long-term storage, the Manila Bulletin reported. The developer also leased out some parking in one of its office towers.
Meanwhile, Ayala Land is planning to convert some parts of its shopping malls to e-commerce facilities. A document seen by Bloomberg noted that the developer had already begun studying the feasibility of turning retail space into last-mile fulfillment facilities.
At the end of the day, the retail sector may never fully recover meaning the issues facing Philippine shopping malls today won’t be going away. By shifting retail space to logistics, developers can tap into a growing segment.
“The industrial sector is all about the basics: basic space, food security, storage, and all the things you need in a crisis. This crisis is a realization that people are always going to need the industrial and logistics sector, and there is huge opportunity here,” Rick Santos, Chairman & CEO of Santos Knight Frank, noted.