THE office segment of the Philippine real-estate industry continues to enjoy a strong market demand with a record high of 1.4 million square meters (sq m) of aggregate workspace transacted as of this month, thus indicating its constant competitiveness in the region, according to Leechiu Property Consultant (LPC).
At an average rate of P303,000 ($5,600) per sq m, condominium values are still on the lower end in the Asia-Pacific market. Net office take-up in Metro Manila as of September 2018 has hit 799,653 sq m—surpassing the full-year 2017 figure of 774,957 sq m.
Information technology-business process management (IT-BPM) industry is still the main tenant, occupying 301,275 sq m. Contrary to call centers, technology and software companies accounted for the majority of the IT-BPM take-up.
Offshore and online gaming space, on the other hand, is the second demand driver, absorbing 170,940 sq m of the inventory. This industry has made its presence felt from Bay City to other districts like Quezon City and Ortigas. Flexible work spaces, front-end finance and other institutions also pushed the office demand.
According to LPC CEO David Leechiu, the metropolis “has enjoyed an eight-year streak of low vacancy rates and increasing rent driven by stable demand from the IT-BPM industry.
“We’re seeing unprecedented growth in Metro Manila, as well as in key cities outside the capital like Clark and Cebu,” he said recently during their Real Estate Market Insights briefing at their office in Makati City.
Overall, regional net office takeup as of year-to-date September 1, 2018, is at 283,948 sq m. For the first time, the former US military base in Pampanga partook a 39 percent share to around 111,000 sq m, or 30,000 sq m more than Cebu, which used to be the second-most desired destination for business locators.
The Queen City of the South took up around 27 percent or 76,000 sq m; Laguna, 16 percent, 46,000 sq m; Iloilo, 6 percent, 16,000 sq m; Cavite, 4 percent, 13,000 sq m; Nueva Ecija, 4 percent, 11,000 sq m; Davao, 2 percent, 6,000 sq m; and Rizal, 2 percent, 5,000 sq m.
Looking forward, office take-up in Metro Manila is projected to reach 950,000 sq m by year-end. Currently, office supply in the metropolis stands at 10 million sq m. Around 3.83 million sq m is expected to be added to this by 2023. Cities outside Metro Manila are foreseen to grow by a cumulative 1,400,000 sq m.
“2018 looks like it will still be another banner year for the office segment, not just in Metro Manila but also for other cities. Rents will continue to move upward this 2018 with new deals being transacted at higher rates,” Leechiu said.
“We foresee that Clark, particularly the new Clark Global City, will continue to be a preferred location for firms in the IT-BPM space and gaming. Clark is well on its way to being the next big location outside Metro Manila,” he stressed.
LPC is a homegrown privately owned professional real-estate brokerage services company. It’s team has a combined experience of leasing over 1 million sq m of office space and selling more than P100 billion in real-estate.