The office sector continues to enjoy high take-up rate within and outside of Metro Manila on the back of competitive lease rates.
Property consultant CBRE reported on Thursday that the aggregate occupancy rate in the metropolis remained hight at 97.1 percent in the second quarter of the year.
According to CBRE Philippines Chairman, Founder and CEO Rick Santos, most of the inventory of new office spaces were occupied by business-process outsourcing (BPO) companies.
“[The] Philippines continue to enjoy steady influx of BPO companies setting up headquarters in the country,” he said.
Total net absorption in Metro Manila central business districts (CBDs) amounted to more than 40,935 square meters (sq m) during the period.
Office spaces in Fort Bonifacio were largely absorbed at 29,767 sq m, or equivalent to 97-percent occupancy.
Makati CBD, on the other hand, partook a share of 12,413 sq m, or 96-percent occupied.
The financial district of Alabang had a 95-percent occupancy rate.
Quezon City had an occupancy rate of 99 percent and Ortigas, 98 percent.
Alternative areas, like Cebu, also saw an improved occupancy rate at 91.62 percent during the period in review.
The biggest take-up noted was in Clark, where office spaces are almost fully occupied by traditional and BPO firms at 98.37 percent on the back of weighted average lease fee of P456.74 per sq m—the lowest rate among its peers.
Rental-growth rate of offices in Cebu decreased by 0.05 percent due to the low lease rate of newly opened Skyrise Beta.
Metro Manila rental rates, on the other hand, grew by 0.81 percent from April to June 2015, with charges of the above-cited CBDs ranging from above P600 per sq m to over P1,100 per sq m.
“The Philippines continues to have the lowest office-rental rates among the Asian countries, making it a prime destination for offshoring activities,” Santos said.
The Philippines, he said, has better take-up rates compared to India, Hong Kong and Indonesia.
While foreign companies entering the country are seen to accelerate strata-titled office demand, not to mention the growing needs of local firms, the top executive is bullish that the industry is ready for this.
In fact, he said in Metro Manila alone, a total of 682,836 sq m is expected to be added to the office supply in 2015, with Fort Bonifacio taking the lead in terms of upcoming inventory.
Overall office supply in Cebu is projected to rise to more than 90,000 sq m, especially in fringe areas once 8 Newton Boulevard Towers is completed later this year.
With the completion of the SM Clark expansion come 2016, a total of 144,120 sq m will be the new total office supply by next year.
“As the outsourcing and offshoring sector gains strength in the country, we see more occupiers and developers prioritizing flight to quality,” Santos stressed.