THE Philippine office market, albeit in an economic slowdown in the first half of 2019, has picked up in the third quarter and is expected to recover for the remainder of the year due to heightened government spending and private consumption, according to a global real-estate services firm.
Cushman & Wakefield’s (C&W) The MarketBeat September 2019 report showed that stable demand kept the vacancy rate at 4.2 percent amid the addition of 360,000 square meters (sq m) to office space inventory within nine months of this year.
The Philippine Offshore Gaming Operators (Pogo) were the main business locators in the metropolis during the period in review.
Overall, Metro Manila office space spans 7.64 million sq m, and Taguig accounted for 2.3 million sq m, with a vacancy of 4.2 percent; Makati, 1.4 million sq m, 1.5 percent; Quezon City, 1.2 million sq m, 5.4 percent; Pasig, 1.1 million sq m, 0.5 percent; Pasay, 611,554 sq m, 0.1 percent; Muntinlupa, 590,487 sq m, 2.4 percent; Mandaluyong, 359,988 sq m, 31.2 percent; and Parañaque, 74,417 sq m, zero percent.
On the average, the asking rent of prime and Grade “A” office buildings increased by 12.5 percent to P994 per sq m a month from January to September 2019.
Leasing price in Taguig on a monthly basis averaged P1,249 per sq m; Makati, P1,235 per sq m; Quezon City, P850 per sq m; Pasig, P777 per sq m; Pasay, P1,025 per sq m; Muntinlupa, P859 per sq m; Mandaluyong, P908 per sq m; and Parañaque, P1,050 per sq m.
By end of 2019, the research revealed that around 520,000 sq m of office space are expected to be completed, even if completion of some developments is likely to spill into early 2020. The mean rental fee is also seen to continue to rise through 2019.
Total rental yields, likewise, are estimated to further shorten due to further cuts in the Bangko Sentral ng Pilipinas’s policy rate and the consistent investors’ confidence in the market.
While office demand from Pogo is projected to decelerate by year-end because of the recent government regulation that controls the issuance of operating licenses to new market players, the continued expansion of the information-technology-business-process management companies and other industries will offset the requirement, per the quarterly report.
International property services company C&W operates in 70 countries through 400 offices with around 51,000 employees. In 2018, the firm posted $8.2 billion in revenue across core services of property, facilities and project management, leasing, capital markets, valuation and other services.
Image credits: NINLAWAN DONLAKKHAM | DREAMSTIME.COM