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Demand for office space in Philippine CBDs seen to ease
Publication Date : 05-08-2014
Demand for office space in the Philippines' key business districts is expected to slow over the next few months and lease rates would likely decline following the completion of a number of new buildings in Metro Manila, according to global real estate services company Cushman & Wakefield.
“We expect [office space] supply to grow by nearly 12 per cent by the end of the year, and more so in the next three years, from 2013’s inventory in Metro Manila. This should push vacancies upward and weigh down on rental growth,” Cushman & Wakefield said in its MarketBeat Office Snapshot report for Manila for the second quarter of 2014.
Despite the projected increase in vacancies, however, office leasing demand is seen slowing down, the report said.
“We should see strong absorption in the market as demand remains robust, especially for grade A space. However, strong completions in the near term could bring down growth rates versus previous years.”
In the second quarter, office vacancy in Metro Manila was at 3.81 per cent, up 1.2 percentage points quarter-on-quarter as well as 0.8-percentage point higher year-on-year.
At end-June, developers’ completions rose by almost 15 per cent year-to-date, hence pushing up vacancy rates, Cushman & Wakefield noted.
The vacancy rate at the Ortigas central business district (CBD) in Metro Manila was the highest from April to June at 8.52 per cent, up from 2.49 per cent in the first quarter.
In Quezon City, 4.60 per cent of office space was vacant during the second quarter; at Filinvest Corporate City in Muntinlupa City, 2.23 per cent; and at the Makati
CBD, 2.19 per cent.Office space vacancy was lowest at the Bonifacio Global City and McKinley Hill developments in Taguig City, with a combined vacancy rate of 1.51 per cent from April to June, slightly up from 1.20 percent during the first quarter.
“Robust demand to locate in Bonifacio Global City and Makati’s CBD, coupled with lease renewals, has kept the market tight in prime and grade A developments.
Vacancy in grade B office buildings in Makati’s CBD increased 0.81 percentage point to 3.9 per cent, as tenants flocked to higher quality developments,” Cushman & Wakefield explained.
All the CBDs covered in the Cushman & Wakefield report are in Metro Manila.