APART from warning boutique developers about a slowdown in the condominium sector, an official from W+B Advisory also cautioned them to reconsider their plans of putting up more malls in the city.
“Cebu is awash with malls. There are more square meters than people,” said Professor Eric Soriano, executive director at W+B Advisory.
Like shifting the focus from vertical to horizontal developments, Soriano discouraged new entrants from venturing into big mall developments, as there is already a shift to neighborhood malls.
“New entrants thinking of putting up big malls should rethink their concept, as less foot traffic in malls is already alarming,” said Soriano, who is also a director of the real estate program of the Ateneo Business School and a SunStar Cebu columnist.
He explained that as developers continue to create pocket communities, people will shift to neighborhood malls, citing the convenience and proximity to their houses or to where they work as an advantage.
“There is nothing to worry about big malls owned by the giants. But for those owned by small players, they have to be competitive,” said Soriano. “They have to constantly come up with product innovation to be highly competitive in the retail landscape.” Another factor that is driving people away from the malls is the rising popularity of online shopping.
Joey Concepcion, presidential adviser for entrepreneurship, said that the future for retail is the digital economy, the reason retail giants are slowly positioning themselves in the online selling sphere to capture the expanding base of online shoppers.
To avoid getting stuck in traffic and massive crowds during mall sales, retail giant SM and Lazada, an online shopping platform, have partnered to host SM’s three-day sales online. Ayala Malls, another retail giant, is also mulling to buy 43.3 percent of fashion retailer Zalora.
“Players now really have to think strategically. They have to come up with a better and competitive value, not only in housing, but also in retail,” said Soriano.
According to Colliers Philippines, Cebu, the leading retail hub outside Metro Manila, has gained most of its retail activities from the BPO workforce, overseas Filipinos’ remittances, local and foreign tourists, and the sustained generation of job opportunities by traditional companies.
Food and beverage (F&B) and fast fashion are the malls’ key driving forces, and Colliers encouraged mall operators to exhibit an interesting mix of F&B and fashion brands to sustain visitor traffic.
With 200,000 square meters of additional retail space in the next 12 to 36 months in Metro Cebu, overall vacancy is also expected to rise to nine to 10 percent, from the current 6.1 percent.