MANILA, Philippines — While the office market remains “challenged” due to high vacancy rates, AREIT Inc., the real estate investment trust arm of Zobel family-led Ayala Land Inc., said they were expecting hybrid work to continue and boost the market by countering the work-from-home inertia.
AREIT president and CEO Carol Mills said their office occupancy rates were “strong” at 93 percent and that they expected to maintain it at this level in 2024, especially as only less than 10 percent of their leases were set to expire this year.
“We have seen higher pedestrian counts in our buildings compared to last year, and we expect hybrid work to continue,” Mills said during their annual stockholders meeting on Tuesday afternoon.
READ: AREIT’s 2023 net income rises 43% to P4.9B
The Philippines’ first REIT firm booked a 43-percent increase in earnings last year to P4.93 billion on gains from new assets, such as shopping centers and offices in the Makati central business district.
Expanding REIT portfolio
AREIT acquired last year the One Ayala Avenue East and West towers, Glorietta 1 and 2 mall and business process outsourcing buildings at Ayala Center, and MarQuee Mall in Pampanga province.
READ: JLL: Metro Manila office vacancies rose to 19.9% in Q1
In all, its properties had a 97-percent average occupancy rate in 2023, which AREIT said was higher than the industry average.
At present, the average vacancy rate in the office industry stands at 18 to 20 percent, according to Mills.
She said that, despite this, many companies continued to expand and retain office space, especially in “more prime and more productive” locations — resulting in more occupancy.
“In any case, our diversified mix with malls, hotels, and industrial assets complementing offices will certainly help mitigate vacancy risks,” she said.
This year, AREIT aims to buy Ayala Triangle Gardens Tower 2, Greenbelt wings 3 and 5 and Holiday Inn and Suites in Makati, as well as Seda Hotel in Cebu City, from Ayala Land via a P28.6-billion deal.
The company also plans to acquire a 276-hectare industrial estate in Zambales from ACEN Corp., the listed energy platform of the Ayala group.
In January, AREIT acquired Seda Lio in Palawan from Ayala Land unit Econorth Resort Ventures Inc. for P1.19 billion.