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Manila Malls May Become E-Commerce Facilities, Medical Clinics Amid Retail Slump

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Key Points

  • Property developers in the Philippines are exploring innovative uses for shopping malls as people stay home and prefer to buy things online.
  • SM Prime Holdings Inc., the nation’s biggest landlord, is leasing out some of its parking lots for longer-term car storage, while a unit of Ayala Land Inc. plans to convert areas in its shopping centers to e-commerce backend facilities and medical clinics.
  • The worst coronavirus outbreak in Southeast Asia has made Filipinos fearful to go about their everyday business and try to avoid high-traffic spots.
  • Visit The Financial Today’s homepage for more stories.

Property developers in the Philippines are exploring innovative uses for shopping malls as people stay home and prefer to buy things online.

SM Prime Holdings Inc., the nation’s biggest landlord, is leasing out some of its parking lots for longer-term car storage, while a unit of Ayala Land Inc. plans to convert areas in its shopping centers to e-commerce backend facilities and medical clinics.

The worst coronavirus outbreak in Southeast Asia has made Filipinos fearful to go about their everyday business and try to avoid high-traffic spots. Which puts extra pressure on retail landlords who are already weathering demand slump and a recession.

According to Joey Bondoc, a research manager at Colliers International Group Inc, the Philippines is home to some of Asia’s biggest malls; Manila and surrounds boast total retail space of 7.3 million square meters. It is more than twice the size of Central Park in New York.

Retail vacancy rates in Manila are forecast to climb to 12% this year while rents will drop for the first time since the global financial crisis, forcing shopping centers to either “innovate or evaporate,” Bondoc said.

AyalaLand Logistics Holdings Corp. is studying turning parts of its malls into last-mile fulfillment facilities, according to a document seen by Bloomberg.

“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.

Meanwhile, SM Prime has rented out a floor in a shopping mall’s car park to a bank, and leased another floor in an office tower, President Jeffrey Lim said in a text message.

“Retail developers must look at possible areas to pivot and re-purpose space,” said Kash Salvador, an associate director at property services company Santos Knight Frank. “We see an opportunity in storage and warehousing given higher logistics demand as shoppers go online.”

Mall owners should also consider leasing empty space to co-working companies as businesses seek smaller offices in different locations, Bondoc said of Colliers.

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