Property consultant KMC Savills expects an elevated vacancy rate for the office property sector amid an influx of new supply in an already burdened office stock.
KMC Savills said last year’s net takeup in Metro Manila was at 74,900 square meters (sq.m.), a 79.5 percent reduction from the prior year’s 365,365 sq.m.
Vacancy rates also climbed to 20.1 percent, it noted.
“Upcoming office completions are set to invigorate leasing activities,” said Joe Curran, KMC Savills chief executive officer, adding demand is seen to be sustained in 2024.
“BGC (Bonifacio Global City) remains the favorable location for prime buildings, leading all submarkets with more than 2 million sq.m. in office stock and an incoming office supply of about 182,000 sq. m. — the highest in all submarkets in Metro Manila for the past year,” Curran said.
He noted lease rates in Metro Manila have stabilized post-pandemic to an average of P858 per sq.m. down by 6.7 percent from pre-pandemic rates.
“Remarkably, Iloilo’s lease rates have increased through the pandemic due to the constant demand from IT-BPM (information technology-business process management) sector which is seen to continue its expansion outside Metro Manila where there is deemed to be a larger talent pool and relatively lower wages,” Curran said.
Cha Carbonell, KMC Savills chief operating officer, said demand for space in the manufacturing and logistics sector are paving the way for the growth of industrial hubs.
Carbonell noted warehousing demand for manufacturing accounted for 41 percent of the current demand, with Laguna being the primary location for over half of the warehouse stock.
“Elevated vacancies, however, may pressure warehouse rents. Particularly noteworthy are the significant decreases in the rental rates of Bulacan, which went down by 42 percent and Pampanga by 21 percent,” Carbonell said.
In the residential sector, Joshua De Las Alas, KMC Savills research and consultancy associate director, said the rise in interest rates is taking its toll on the mid-market condominium, particularly with the requirement to live near the place of work declining.
This led for developers to focus more high-end and luxury developments, which make up 60 percent of the new launches in the past two years.
De Las Alas said of the 113,000 units made available in the market, only 65 percent had been sold, with half of the remaining 40,000 coming from the mid-market segment.
