A record number of new office space was completed in many parts of the business districts in Metro Manila during the second quarter of the year but strong demand held office vacancies to just around 4.2 percent, exceeding the initial estimates of real-estate service firm KMC Savills Inc.
According to its research, some 264,300 square meters (sq m) of office space were created during April to June. Half of this space came from Bonifacio Global City (BGC) in Taguig, while vacancies in other submarkets, such as Quezon City, remained high. Vacancies were relatively stable for other places, such as Alabang, Ortigas Center and Bay Area.
“However, we have observed declining rental growth in a number of submarkets, indicating significant supply pressure,” Michael McCullough, the company’s managing director, said. “Keeping rents affordable during this massive inflow of completions should sustain the take-up velocity in Metro Manila.”
According to KMC Savills’s research, there’s still demand from renters—mainly business-process outsourcing firms—around Metro Manila as the number of buildings under construction is likely to keep up.
“In Makati vacancies climbed to 3.1 percent from 1 percent, especially with the addition of the Insular Life Makati building. The research said, however, tenants are already relocating to BGC, also developed by the Ayala Group, from the Makati CBD. “Furthermore, we still see rents to maintain its current growth trajectory as the vacancy rate is forecast to remain in the low single digits by end-2018,” KMC Savills’s research said.
Vacancies in the BGC, on the other hand, rose to 3.8 percent, up from the previous 0.9 percent, but mainly as a result of record completion of about 140,800 sq m of office space.
Meanwhile, Alabang introduced a substantial amount of Grade A office space during the period, which includes Vector Three at the Northgate Business District. “Even with vacancies rising to 5.3 percent of total Grade A office stock, net take-up exceeded expectations and should temper the vacancy rate until the end of the year,” according to the research.
Vacancies in Ortigas Center, however, remained low at 1.2 percent of total top-grade office stock, a stark opposite of Quezon City’s high vacancy rate of 10.7 percent of total stock despite no additional supply in the market during the quarter. “The elevated vacancy rate is expected to be sustained with the introduction of the Vertis North Corporate Center towers in the second half of the year,” the research said. “Although preleasing for the first building shows promise, the lack of demand in other areas of Quezon City will likely drag overall performance.”
Image credits: Alysa Salen
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BInondo CBD in Manila has new high rise office buildings. Fairview CBD in Greater Lagro, Q.C is currently having a construction boom with SM City Fairview expanding its mall with the the construction of it’s Annex building 3 with 5 BPO towers. The eastern CBD bordering Marikina City, Cainta and Antipolo City in Rizal is also in the mood constructing high rise office buildings. Monumento in Caloocan City should be redevelop and high rise office buildings should be constructed. Metro Manila should create more business districts to ease the demand for office and retail spaces. The north and eastern portion of the metropolis can be redevelop to high rise zones