Property consultancy JLL Philippines sees vacancy rate in the Metro Manila office property sector to stay elevated at an average of 22 percent this year and lease rates to plateau to P1,000 per square meter (sq.m.) per month as the industry grapples with pressures from new supply, delayed turnovers and soft demand due to hybrid work.
Janlo Delos Reyes, head of research and strategic consulting, in a press briefing said it will take five more years before the office market returns to pre-pandemic vacancy rate of 8 to 9 percent
As of the first quarter, vacancy rates stood at 19.9 percent from 17.8 percent in the same quarter in 2023 but slightly lower than 20.3 percent in the fourth quarter.
Delos Reyes said creating pressure is the move-out of some occupiers, particularly of business process outsourcing (BPO) companies. Move-outs h freed 97,365 sq.m. of space in the first quarter alone.
The office property market will receive an additional supply of 582,234 sq.m. this year.
Some projects whose turnover had been delayed in the previous years will also augment stock which now stand at 10.9 million sq.m.
“Office demand continues to be tempered by hybrid work arrangement,” Delos Reyes said.
Delos Reyes sees BPOs rightsizing their space takeup although some are still growing their footprint.
“We are seeing smaller transactions.”
“It’s mixed bag for BPOs. There are some companies are taking up space such as those in the financial services segment which are handling sensitive information,: he added.
