A property consultancy company sees some “green shoots” in the real estate market particularly in the office and retail sectors now mired by rising vacancies and falling rents.
Janlo delos Reyes, head of research of JLL, in a webinar said the electronic commerce phenomenon in retail will not compete directly to the brick and mortar. Online channels, he said, will in fact feed back into the physical space as a complement.
“It’s going to become marriage of both. I think that’s going to transform retail moving forward,” Delos Reyes said.
He added as corporates move to online space, a subsequent demand for tech security backend, data centers and logistics will emerge, boosting demand for office space.
Delos Reyes notes opportunity for speculative build for logistics.
“Data centers and logistics as some of their most recent resilient asset classes globally and has been growing (vis-a-vis) other corporate real estate, traditional asset classes in terms of volumes and values. That’s going to carry over in 2021 in the future, as we’ve seen more migration into big e-commerce platform by a lot of retailers,” he added.
“We’re seeing it now, given that there’s a lot of interest coming from retailerrs that are looking at warehouse space. Facilities are quite limited in the market and these are mainly build-to-suit,” Delos Reyes said.
Vacancy in the office market has risen to 9.5 percent due to the absence of demand from Philippine offshore gaming operations and the shift to work-from-home arrangements
But the business process outsourcing and traditional companies spreading their operations will drive office demand.
In retail, Delos Reyes noted a 5.9 percent vacancy rate in the third quarter 17,000 sq.m. of space by both non-food and food closed.
Rents have declined 17 percent to date.