THE BAY Area and Quezon City are fast becoming the new hubs for information technology-business process outsourcing (IT-BPO) firms seeking office space outside the prime central business districts (CBDs) of Makati and Bonifacio Global City (BGC).
Office vacancy and rental rates in Metro Manila are also expected to remain stable despite the significant number of new office space being put up over the medium-term, based on the third quarter 2015 office property research of real estate consulting firm KMC MAG Group.
The market absorbed about 231,412 square meters (sqm) of new premium and grade A office spaces in the third quarter, the largest recorded quarterly take-up of all time, KMC MAG managing director Michael McCullough said in a press statement.
The KMC MAG report, which tracked the office property markets in the six CBDs of Makati, BGC, Alabang, Ortigas, Quezon City and the Bay Area, estimated 232,961 sqms of new office space had been delivered in the third quarter, most of which had been committed for leasing ahead of completion.
The report said the Bay Area recorded the highest year-on-year rental rate growth among all districts at 17 percent in the third quarter, bringing average grade A office rent to P673.4/sqm.
“Vacant spaces in the district continue to dwindle with only 1.3 percent of spaces available in third quarter 2015 in spite of the turnover of Five Ecom (by SM Prime) due to it being mostly pre-leased,” the KMC MAG report said. “Bay Area’s pipeline is also rather impressive with close to 240,000 sqms to be delivered before 2018.”
In Quezon City, the research noted monthly rental rate averaged P700.40/sqm in the third quarter, growing by 8.5 percent year-on-year.
“The district posted the lowest vacancy rate among all districts in third quarter 2015 with only 0.2 percent of its total stock left unoccupied,” the research said, noting that office space in the district would remain scarce as no new development would come on stream until the second half of 2016.
On average, the monthly rental rate of grade A offices in Metro Manila increased by 6 percent year-on-year to P822.7/sqm in the third quarter.
Makati CBD still commanded the highest rental rate with an average of P971.10/sqm while Alabang continued to lag behind the others with an average rental rate of P605.30/sqm.
BGC’s rental rate grew by 3.7 percent year-on-year for the third quarter, bringing its average rental rate to P860.4/sqm. Vacancy rate slightly increased to 2.6 percent from 1.3 percent in the second quarter, which the report attributed to an increase in supply.
Makati recorded a vacancy rate of 3 percent in the third quarter, which KMC MAG attributed to the sparsely occupied Tower 6789. But it noted that the scarcity of free landbank in the CBD would keep vacancy rates low until 2020.
For Ortigas Center, the research noted average rental rate had risen by 6.8 percent year-on-year in the third quarter, bringing the district’s average asking rate to P624.6/sqm.