PROPERTY consultant Colliers International said vacancy in the office market in Metro Manila could peak at 10 percent this year as demand slows.
Joey Bondoc, senior research manager at Colliers, said the month-long enhanced community quarantine in Luzon will result in slower takeup as well as delay in the delivery of supply from developers as construction stops.
In this case, vacancy rate could hit 8 percent, Bondoc said.
These numbers have not been seen since the post-global financial crisis in 2008 when vacancy rates reached 7 to 9 percent.
The 10-percent projection takes into account a prolonged lockdown, or at least a lingering slowdown of at least six months in the takeup from Philippine offshore gaming operation (POGO) companies which had since been banned, business process outsourcing (BPO) and traditional offices.
Bondoc said projections are even tempered as most POGO offices spaces are covered by six- to 12-month pre-leasing contracts for the year
“We were originally projecting there would be one million square meters of new supply this year. The question is, will these be competed and delivered,” Bondoc said.
On an annual basis, about 30 percent of new supply is taken up by POGOs and the rest by BPOs and traditional offices.
“A number (of clients) are willing to take up the new spaces but these (deals) are on hold… they are waiting for the issue (coronavirus disease 2019) subsides,” Bondoc said.
Depending on the extent of the community quarantine in Luzon due to COVID-19, Colliers said the possible upside for the Metro Manila office sector is that other segments could bridge the demand gap left by POGO firms.
“If expansion and consolidation plans of outsourcing and traditional firms recover in the second half, vacancy will likely point to around 6.8 to 7 percent. However, should the pandemic take a more significant toll on demand, then vacancy could be closer to 8 percent in 2020,” Colliers said in a separate report last week.
