Contrary to predictions that e-commerce would fully replace brick-and-mortar stores, global consumer behavior shows a resurgence of interest in physical retail as destinations for shopping, interaction, and experiences.

According to Savills' Impacts 2025 report, global retailers are rebounding faster than expected. In the U.S., mall foot traffic in 2024 rose by 1.5% year-on-year and 7.3% compared to pre-pandemic 2019. Nearly 80% of U.S. consumer spending still occurs in physical stores - a significant figure in the digital age.

In Vietnam, Ho Chi Minh City plays a leading role in this trend. In Q1 2025, the city’s total retail space reached 1.6 million square meters, up 6% year-on-year. The occupancy rate hit an impressive 94%, reflecting genuine demand from both tenants and consumers.

Despite a slight adjustment due to new, lower-priced projects entering the market, ground floor rental rates still averaged 1.4 million VND/m²/month (approximately 55 USD), marking a 9% year-on-year increase.

Modern retail formats continue to dominate. Malls like Thiso Mall Sala, Vincom Mega Mall Grand Park, and Parc Mall achieved over 70% occupancy shortly after launch. In contrast, street-level retail is falling behind due to its lack of investment in customer experience, amenities, and professional management - factors that are increasingly prioritized by Vietnamese consumers.

In Hanoi, rental rates for ground floors also surged by 6% year-on-year, with central areas seeing a jump of 37%. The occupancy rate reached 86%, while new leases indicate a shift away from F&B dominance toward fashion, cosmetics, and convenience stores.

Retailers now lead investment, not the other way around

Previously, investment capital sparked growth in the retail sector. Today, it's the retailers themselves - particularly brands in fashion, cosmetics, home furnishings, and F&B - that are setting the pace and attracting investors.

Still, many investors remain cautious after past failures with underperforming retail assets. According to ANREV's “Investment Intentions” survey, global institutions are expected to allocate only 12.4% of their 2025 portfolios to retail real estate, down from 27.7% in 2018. Nonetheless, recovery signals are strengthening. In 2024, capital flow into the sector picked up, especially in the second half.

Tran Pham Phuong Quyen, Senior Manager of Retail Leasing at Savills, noted: “As many international brands consider Southeast Asia, Vietnam stands out with its young, energetic population and a growing appetite for experiential shopping. Additionally, labor, construction, and warehousing costs remain lower here than in many regional peers, allowing brands to optimize costs and achieve greater profitability.”

Investment is focusing on well-operated assets aligned with omnichannel retail strategies, from urban malls to suburban retail parks. Asset repricing post-pandemic has also made investment more favorable, and retail now offers better yields compared to the overheated residential and logistics sectors.

Retail as an operational asset

A significant shift in investment thinking is underway: retail is no longer just real estate for rent. With consumers demanding more from brands and experiences, retail property is now viewed as an operational asset - requiring seamless integration of management, technology, branding, and deep insights into shopper behavior.

Modern malls must function as complete ecosystems. Everything - from tenant mix, foot traffic, and marketing strategies to spatial design and service offerings - impacts operational efficiency and asset value. The retail leasing market will see a strong shift toward professional advisory services.

Beyond connecting tenants with space, both landlords and brands are increasingly relying on data-driven consultancies to identify optimal spaces for each growth phase. Tenant and landlord representation will play key roles in redefining negotiation dynamics and performance.

Furthermore, developing successful malls demands long-term, synchronized strategy. Developers must ensure leasable spaces meet standards, build capable leasing and operations teams, and establish clear communications to turn projects into regional destinations. Retail real estate is now a long-term journey.

A major opportunity for retail

By 2025, the retail sector is officially back on the growth track - albeit not in the same way as before. In a market increasingly driven by experience and performance, Vietnam - especially Ho Chi Minh City - holds key advantages: a youthful population, dynamic consumer behavior, and efficient operating costs. These factors position it as a strategic destination for global brands.

However, experts warn that Vietnam's retail industry in 2025 stands at a crossroads: evolve or be left behind amid global economic turbulence.

Businesses need supportive policies - from tax incentives to logistics infrastructure investment - and, above all, consumer trust to thrive.

Nguyen Anh Duc, Chairman of the Vietnam Retail Association, emphasized that local governments must revamp commercial zoning and prioritize modern logistics hubs, warehousing, and transport systems to reduce costs and boost competitiveness for Vietnamese goods.

He also noted the rise of green retail. Alongside digital trends, eco-conscious shopping is reshaping the market. Consumers - especially younger generations - are prioritizing environmentally friendly products, from organic food to recyclable packaging.

PV