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Cooperative growth for a more sustainable approach as the real estate market prepare for headwinds

As of third quarter 2022, preliminary data shows that office supply in Metro Manila have reached 11.9 million sqm of gross leasable area. Some of the notable completions for this period are designed as green buildings and positioned to support the growing need for more sustainable buildings. Some of the notable developments that have started pre-leasing activities are pre-certified for LEED Gold, One Filinvest in Ortigas Center and GBF Center Tower 1 inside Bridgetowne will have 98,000 sqm of combined sustainable gross leasable space. Occupiers who are committed to meeting their ESG goals will potentially target these newer green buildings in support of more sustainable business operations.

Occupiers from the IT-BPM sector are expected to take up more office space to counteract the lack of POGO locators in the next 2-3 years. IBPAP also forecasts an 8% annual growth in the next six years with projected revenues of USD 60 billion. Supply of office spaces in Metro Manila are expected to reach 13.8 million square meters by 2025 based on pipelined office developments today. Based on data gathered by Prime Philippines Research, at least fifty percent of the projected supply are still concentrated in Makati and BGC, however, Quezon City and Pasig City are also expected to contribute 15% and 16% share of the supply, respectively. New office buildings like The Upper Class along Quezon Avenue, positioned as a premium office building, is ready to accommodate the growing demand from BPO, tech, and fintech businesses and give access to the huge labor market residing in Quezon City. The completion of Skyway Stage 3 has also shortened travel time from Muntinlupa to a 45-minute drive and makes Quezon City more accessible to the southern Metro Manila labor market. However, given the current economic condition of the country, as an effect of global economic pressure, some firms have dampened plans of expanding their businesses which may affect pre-leasing activities of some of the newer buildings. Meeting the immediate needs of occupiers such as access to labor market, shorter commute times, and operational building efficiency, are some of the immediate sustainable measures that firms can adopt.

Activities in the industrial sector remained strong during the second quarter and towards the third quarter as Philippines’ investment agencies and FDI’s allocated funds towards manufacturing, real estate activities, and transportation and logistics sub-sectors. SBMA welcomes Vectrus Subic Corporation to operate the old Hanjin Subic Shipyard and aims to hire former Hanjin employees with shipyard skills to be part of the organization. Vectrus is a U.S. based global service provider that offers facility and base operations, supply chain, and logistics services, information and technology mission support, and engineering and digital integration services. Foreign investment committed by SBMA for the second quarter represented 71% of the total approved FDI for this period while other investment agencies did not report any new investment for this period. The DTI-BOI, BCDA and in partnership with Filinvest Land, have conducted roadshows to promote New Clark City as the Sustainable Futurecity of the Philippines in Singapore. New Clark City is allocating 120-hectare to be an industrial hub and offer ready built factories, build-to-suit industrial buildings for factories, warehouses, logistics, and support offices. Robinsons Land estate project in Porac will be allocating 28-hectares of the Montclair Destination Estate as an industrial park that will offer industrial lots and build-to-suit facilities. The Clark Civil Aviation Complex is positioning itself to revive aviation activities in Clark as it is now home to three of the world’s largest MRO (maintenance, repair, and overhaul) service provider for Singapore Airlines Engineering Philippines, Lufthansa Technik Phils., and Hong Kong’s Metrojet Engineering.

Prime Philippines Research have recorded at least 37.1 million sqm in supply of warehouses within key areas of the Philippines, and southern greater Metro Manila still supply 49% of the warehouse stock and only 26% are in the northern provinces. With the strong support of both the public and private sector in promoting and developing estates in Central and North Luzon, we expect that new supply of newer and modern facilities will spur industrial growth in the region generating more jobs, commercial and real estate activities. 

As the country prepares to deal with global economic pressures through tightened access to credit, higher operational costs, and adopting to regulatory mandates on hybrid operations, businesses will start finding ways of identifying operational efficiencies and reassess business expansion plans. Sustainable interior designs and availability of more green building office spaces are one of the possible cost-efficient ways of sustainable business expansion in the real estate market today.

PRIME Philippines is the leading real estate consultancy firm for emerging markets with offices in Manila, Cebu and Davao, garnering over USD 400 million in successful deals, over 3,000 clients served, and covering over 60% of the cities of the Philippines. Interested individuals and organizations may go to this link to subscribe: https://realestateintelligence.primephilippines.com or visit their website at https://primephilippines.com/. For replays of past webinars and online events, please refer to: https://primephilippines.com/press-room/.

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