Property consultant KMC Savills said office space transaction in the second quarter dropped 25 percent from the previous quarter to 88,200 square meters (sq.m.) from 117,600 sq.m.
KMC Savills said transactions kept declining from its peak in the third quarter of last year when it recorded 175,800 sq.m.-worth of deals.
“As a result, vacancies have remained unchanged despite the lack of new supply this quarter,” it said.
KMC Savills, however , noted Makati central business district managed to post a rebound to end up in net absorption of 22,200 sq.m. from last quarter and reduced its vacancy rate to 14.8 percent.
“Much of the traction was seen with buildings along Ayala avenue which have started to adjust their rates while also providing more incentives,” KMC Savills said in a report.
KMC Savills said that to the lack of traction in the market, average rents fell by 0.8 percent quarter on quarter despite the recovery in the first quarter of 2023.
“Rates in BGC (Bonifacio Global City) and Ortigas Center were able to grow marginally, but losses for the rest of Metro Manila persisted,” it said.
Although Makati CBD rentals declined by 5.7 percent year on year, office space in the financial district has become more affordable which aided the jump in transactions, the report said.
“Erosion in average rental rates lingered in the secondary submarkets, but we believe this will level off later this year,” it added.
In BGC, the average net rental rate was at P1,044 per sq.m., while it was at P690.1 per sq.m. in Ortigas.
KMC Savills said the average rent in BGC continues to see growth this quarter, “but some landlords have adjusted their asking rents due to the abrupt lack of demand this year.”
“Although this may be a divergence between available inventory and occupier requirements, we still believe that affordability is a main concern,” it said.
