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Manila malls may be used as e-commerce storage amid retail slump
PROPERTY developers in the Philippines are considering novel alternative uses for shopping malls as more people stay home to shop online.
SM Prime Holdings, the nation's biggest landlord, is leasing out some of its parking lots for longer-term car storage; a unit of Ayala Land plans to convert areas in its shopping centres and lease them to e-commerce back-end facilities and medical clinics.
The Philippines is home to Southeast Asia's worst novel coronavirus outbreak. Filipinos are more fearful of going about their daily business, and they are seeking to avoid high-traffic spots.
This trend is putting extra pressure on retail landlords, who are already weathering a slump in demand and a recession.
The country is home to some of Asia's biggest malls. The capital Manila and its surrounds have 7.3 million square metres of retail space, said Joey Bondoc, a research manager at Colliers International Group.
Retail vacancy rates in Manila are forecast to climb to 12 per cent this year, and rents will drop for the first time since the global financial crisis, forcing shopping centres to either "innovate or evaporate", he said.
AyalaLand Logistics Holdings is studying turning parts of its malls into last-mile fulfilment facilities.
"We continue to explore opportunities," said Francis Montojo, the unit's chief finance officer. He added that other commercial areas may be converted to healthcare clinics or office space.
SM Prime, meanwhile, has leased out a floor in the carpark of a shopping mall to a bank, and another floor into an office tower, its president Jeffrey Lim said.
AyalaLand Logistics shares fell as much as 2.3 per cent in Manila trading on Thursday, heading for a three-day losing streak. The benchmark Philippine Stock Exchange Index rose 0.8 per cent.
Kash Salvador, an associate director at property services company Santos Knight Frank, said: "Retail developers must look at possible areas to pivot and repurpose space.
"We see an opportunity in storage and warehousing, given higher logistics demand as shoppers go online."
Mall owners should also consider leasing vacant space to co-working companies as businesses seek smaller offices in various locations, Colliers' Mr Bondoc said. BLOOMBERG