Real estate consulting Lobien Realty Group (LRG) said rents have dropped 3 percent from a year ago but commercial property values in the central business districts (CBDs) have remained almost the same because of the low and finite supply of land in these locations.
LRG said from an average rent of P1,160 per square meter (sq.m.) in February 2020, the current value is at P1,120 per sq.m.
This is in the face of an 8-percent vacancy of office spaces across all Metro Manila CBDs.
In the fourth quarter of 2020, supply of office space in Metro Manila totaled 739,312 sq.m. of which 57.59 percent or 425,778.83 sq.m. is occupied or remains leased, with available remaining supply at 313,533.17 sq.m.
LRG identified three major factors that affected rental rates in Metro Manila CBDs: closure of offices of many tenants led by Philippine offshore gaming operations; postponement of new and current companies’ start of operations and expansion plans and; on work from home arrangements.
The highly affected cities are Makati, Taguig and Bay Area.
LRG expects renegotiated rental rates to remain in their current level or at the minimum, become lower by 10 percent.
LRG has not observed any significant decline in land values in CBDs due to the pandemic.