Office property sector still in ‘sweet spot’

Property developer Net Group sees the local office property sector remaining in a sweet spot, with its upcoming 38-story office tower in Bonifacio Global City attracting tenants ahead of its 2015 completion in line with the trend of rising “precommitments” in the office segment.

In an interview, Net Group president Carlos Rufino said the group had broken ground on Net Park, its latest office property project in BGC, and signed up a multinational corporation as its anchor tenant. This first tenant has signed up a precommitment to lease office space for 10 years, he said.

Net Park, which will have 65,000 square meters of leasable space, is among the two buildings excluded from a recent deal that gave a controlling stake in five BGC office towers built by the Net Group to the group of tycoon Henry Sy. It will be the seventh office building developed by the Rufino group in BGC and the biggest in its portfolio.

The sixth office building, the Net Lima, is now fully leased and completed, Rufino said. This building will likewise remain in the group’s full control.

The seventh building will be completed by the second quarter of 2015, Rufino said.

“We are pleasantly surprised with the take-up for the building that will be completed in 2015. We’ve already signed up the first anchor—a multinational company,” Rufino said. “There’s demand for corporate headquarters office.”

With the Shangri-La group opening up a new hotel and the Philippine Stock Exchange moving to BGC as well, Rufino said prospects were bright for BGC.

For the Net Group, however, the seventh building will be the last that can be accommodated in its existing landbank in BGC. “We’re now back into the landbank mode,” Rufino said, adding that his group was looking for new areas to develop outside of BGC but likewise within Metro Manila.

Apart from the office segment, Rufino said the Net Group was keen on getting into the logistics segment of the property market, but also within Metro Manila.

The SM group recently gained a foothold in BGC’s office property market by completing the deal to acquire five office towers built by the Net Group. This will give the SM group an 85- to 90-percent economic interest in the five buildings.

The SM group is buying out controlling interest in 10 companies from Net Group’s partner in the project but Net Group itself was retaining its existing interest. The buildings included in the deal are Net One, Net Square, Net Cube, Net Quad and Net Plaza. Counting only the gross leasable area, these five buildings have a combined space of about 147,000 sq m out of a gross floor area of 220,000 sq m.

SM acquired the equity interest of Net Group’s partner CPI Asia Ten BV in these buildings. CPI Asia Ten BV is a private equity fund managed by a New York-based asset manager but with an office in Hong Kong.

More investors are seeking office space in Metro Manila even in buildings that have yet to be completed, indicating rising confidence in the country and strong underlying demand from businesses, experts from property consulting firm Jones Lang Lasalle said. These leasing precommitments are now estimated to be greater than if not equal to companies picking up space in existing office buildings. Doris C. Dumlao