What the pandemic has ultimately taught us is to be more mindful of our health, whether in public spaces, at home or at work.
Specifically for office spaces, there should definitely be no compromise. Companies must ensure that employees continue to enjoy the perks of a collaborative workspace while maintaining their overall health and wellness. This only strengthens the importance of being in a sustainable and healthy office space, especially now that restrictions and controls have been lifted.
Colliers has seen major occupants including multinational corporations (MNCs) increasingly taking up space in these high quality, sustainable, and healthy office towers. Major information technology and business process management (IT-BPM) companies are also looking for such office spaces as they encourage their employees to gradually return to the traditional setup. Colliers believes that taking up spaces in these buildings contributes to fostering a more collaborative work environment.
Enticing companies to locate in sustainable buildings
Colliers sees an estimated 57 percent of new office supply in Metro Manila from 2022 to 2024 likely having Leadership in Energy Environmental Design (LEED), WELL or Building for Ecologically Responsive Design Excellence (BERDE) certifications.
In our view, benefits such as 35 percent lower carbon emissions, 40 percent cut in water use, and 50 percent reduction in energy use should encourage more companies to locate in a green or sustainable building. Green architecture can translate into energy savings and construction costs. These savings are likely to entice more firms to locate in high quality and sustainable office towers across Metro Manila.
Adopting the sustainable route to office development
In 2009, Quezon City implemented a green building ordinance which required the design, construction and retrofitting of buildings, other structures and movable properties to meet minimum standards of green infrastructure-providing incentives.
Colliers is optimistic that other local government units (LGUs) will follow suit, and this should provide landlords with more incentives to develop more green buildings in their respective LGUs. In our view, there should be a strong public-private partnership in promoting a more aggressive development and utilization of sustainable office spaces across the Philippines.
Sustaining demand
Occupiers are now more discerning with design considerations. Sustainable features such as filtered air circulation, lowered density ratios, and high glass ratios for natural lighting are among occupiers’ key considerations when choosing a new location. Other long-term benefits include a 15 percent reduction in operational costs due to energy savings, which will likely outweigh the 15 percent increase in capital expenditure.
Differentiating projects in a competitive office market
Colliers believes that product differentiation plays a crucial role in ensuring that buildings are appropriate to the needs of the tenants given the increasing options in the market and as more landlords take the sustainable route to office development.
Developers should be aggressive in highlighting their building certifications and should actively chase occupants that are on the lookout for these sustainable offices. Landlords may also consider bundling other concessions such as fit-out allowance to entice new and long-term tenants.
New sustainable office options across Metro Manila
Among the sustainable buildings completed across Metro Manila from 2022 to the first half of 2023 include Studio 7, Makati Commerce Tower, and NEX 54. Between now and 2026, we expect the completion of 1.1 million sqm of new sustainable office spaces, which will come from M3 Corporate Center, Hudspace (GH Tower), Pioneer House BGC, Camaro Square, and Columna.
Outside traditional office buildings, developers should ramp up construction of more sustainable office towers to capture demand from large occupiers that put a premium on sustainability. At present, most of these developments are concentrated in Metro Manila but developers outside the capital region have also started to take the sustainable route to office development.
Being in a sustainable office space is a ‘must’
Colliers Philippines believes that these sustainable office towers play an important role in reigniting interest in the Metro Manila office market postpandemic. Tenants now see the need to be in these office spaces while developers are actively capturing demand in the market.
We definitely see the urgency to be in these office towers. Being in a sustainable office space used to be a nice-to-have—now, it is a must-have. For now, what we can conclude is that when it comes to office leasing and development, sustainability is everyone’s responsibility.
The author is director of Office Services-Landlord Representation at Colliers Philippines