Metro Manila’s office property prospects still seen to be rosy

The office property market in Metro Manila is expected to remain positive over the next 12 months because of the country’s strong economy and sustained growth of the local business process outsourcing industry, according to a report from global real estate advisor Cushman & Wakefield.

“Upward trajectory of office market [is] expected to continue. The offshoring and outsourcing activity is expected to boost the economy as companies continue to locate and expand in Metro Manila, with the Information Technology and Business Process Association Philippines (IBPAP) forecasting $21.3 billion in revenue and 1.2 million full-time employees for the industry this year,” Cushman & Wakefield said in its latest Marketbeat Report for the Philippines.

Office stock is seen to increase rapidly with more than 600,000 square meters of space due for completion within the year. The incoming supply and stable office demand are expected to moderate the growth of rental rates as new office spaces become available to the market.

Of the additional office space that is expected to become available this year, more than half, or 316,786 sq m, will open in Bonifacio Global City, in the next three to nine months.

The report further showed that, in the first quarter of 2015, the office property market remained stable despite delays in the completion of certain projects including Uptown Place Tower 1, MDi Corporate Center, 45 San Miguel, Wilcon IT Hub, and Filinvest Two.

Tower 6789—formerly the Alphaland Makati Tower completed in 2013—was opened to the leasing market late in the quarter, making available 48,000 sq m in the Makati central business district. The opening of the tower brought vacancy in Makati City up to 7.7 percent for prime and Grade A office space. Pasay City has the lowest vacancy rate, with all existing Grade A office buildings fully occupied, the real estate advisor reported.

“Overall, vacancy increased only slightly to 4.2 percent, from an adjusted 4 percent last quarter, with much of the available space accounted for by new buildings and small units in existing buildings being vacated. Net absorption for prime and Grade A office space in Metro Manila is estimated at 39,228 sq m for the quarter,” it explained.

Cushman & Wakefield added that asking rents rose slightly by 1.9 percent to an average of P749 per sq m a month in Manila’s major markets in the first quarter of 2015.

It noted that Makati City remained the most expensive market at P1,033 per sq m a month. Pasig City and Taguig City saw quarter-on-quarter increases in rental rates by 5.2 percent and 2.5 percent, respectively, “due to demand for the remaining available space in previously completed Grade A buildings.”