Leechiu Property Consultants (LPC) said office demand in the third quarter of the year hit 313,000 square meters (sq.m.), up 240 percent from last year’s 92,000 sq.m. as restrictions to ward off COVID-19 are lifted.
The property consultant said last quarter’s uptake is the highest recorded since January 2020.
LPC in a statement said demand on a year-to-date basis is at 692,000 sq.m., up 27 percent from last year’s 544,881 sq.m.
“Office take-up in the first nine months has surpassed 2016’s demand of 647,000 sq.m. and will most likely register by year-end at the 750,000-800,000 sq.m. level due to notable live requirements now at 488,000 sq.m.,” it added.
Live requirements, which sum up office transactions in various stages of consummation, are its highest since the second quarter of 2019.
“Vacancies across Metro Manila are at 18 percent with contractions remaining at manageable levels,” said David Leechiu, LPC chief executive officer.
“Contractions appear to have levelled off and it feels like we are back to 2016 before POGOs (Philippine offshore gaming operations) hyper-charged the market beginning in 2017,” he added.
Leechiu said the information technology and business process management (IT-BPM) sector accounted for 332,000 sq.m. of uptake.
Mikko Barranda, LPC director for commercial leasing, noted that from 2020 to date, office demand increased by 78 percent while contractions decreased by 31 percent.
Net demand on a year to date basis is at 314,000 sq.m. led by the IT-BPM sector, which accounted for 222,0000 sq.m. of net demand in the past two years.
“Despite lockdowns and surges and various work arrangements, IT-BPMs posted over the same period net demand of 513,000 sq.m., representing a 7 percent increase in their footprint which now registers at 7.5 million sq.m.,” he said.
Capital values of key business districts have likewise remained resilient in the last two years even in the face of the pandemic, the declining peso, the inflation and the rising interest rates, LPC noted.
“Key business districts continue to prove that they are low risk investments since their values are driven by the supply in their respective areas and are not affected by economic downturns,” said Alvin Magat, LPC director for investment sales.
Magat said the last two years of the pandemic spurred ecommerce platforms and other technology-dependent services which, in turn, have driven demand for industrial sites for warehousing, data centers, manufacturing facilities and distribution hubs.
“In the next four years, 2.6 million sq.m. of new industrial land will come on stream to meet that need,” he added.
Roy Golez, LPC director for research and consultancy, at the same time said residential unit developers seem to be more confident of better days ahead as launches spiked by 127 percent since the second quarter of this year.
This is also notable through continued increase in residential lot prices in Cavite and Laguna, with a prime subdivision showing a compounded growth of 15 percent over three years and another exhibiting a 12 percent increase over just eight months, Golez pointed out.
“The completion of new infrastructure north of Metro Manila and business expansion have also raised residential lot prices in Bulacan, Pampanga and Bataan. First home lots in two subdivisions in Porac, Pampanga, for instance, have registered a compounded growth of 16 percent over 8 years,” he said.
Golez also noted the government’s target to deliver one million affordable housing units annually to address the current backlog of 6.5 million units, which will result in a 3.14x multiplier effect in the housing sector “that will cut across other segments of society and help pump prime the economy.”
