PH leads in office space growth

The Philippines outpaced the rest of the Asia-Pacific region in terms of the net absorption of office space in the first nine months of the year, which was proof of the country’s robust economic conditions and improved business sentiments, according to global real estate advisor Cushman & Wakefield.

The absorption of office space by Metro Manila reached 482,126 square meters, surpassing Mumbai, which came second at 314,528 sqm. Other locations included in the Top 10 areas with the highest absorptions were Bengaluru, Guangzhou, Pune, Chengdu, Shenzhen, Kuala Lumpur and Seoul.

“The performance of the office sector in Manila compared with other cities in the region is a testament to how strong the market is today,” noted Joe Curran, general manager of Cushman & Wakefield Philippines, the local unit of the New York-headquartered Cushman & Wakefield.

“[Metro Manila] is witnessing a positive momentum due to strengthening economic conditions and improved business sentiments, relatively insulated from the global slowdown. Stable growth in the BPO sector continues to fuel office expansions in Metro Manila,” Curran further said.

In a presentation on Thursday, Curran also reported that 59 percent (285,024 sqm) of the total absorptions in the first three quarters of the year occurred in Taguig City, followed by Makati City, which had an absorption rate of 29 percent (139,103 sqm). Absorption of office space in the Ortigas and Muntinlupa areas stood at 48,818 sqm and 9,178 sqm respectively, he added.

New supply of office space, meanwhile, is estimated to reach 514,958 sqm by the end of 2013.

Since the vacancy rate has declined rapidly to an average of 4.29 percent, Curran noted that this could put upward pressure on rental rates or office leases.

“Completions are expected to be thin in the first half of 2014 as developers are expected to complete projects by end 2014, 2015 and 2016. This is expected to put [upward] pressure on prices and vacancy,” Curran said.

“Overall, rents will experience upward pressure, but a slowing growth rate as demand stabilizes,” he said.

Incoming office supply for the fourth quarter of 2013 to 2015 is estimated at 1.2 million sqm in Metro Manila with Bonifacio Global City, accounting for 42 percent of new supply.—Amy R. Remo