PROPERTY consultant KMC Savills sees the Cebu office market posting a double-digit vacancy rate by the end of the year due to a surge in supply due coming from last year.
Speaking at a webinar of the British Chamber of Commerce Philippines, the property consultant said pre-leasing data indicates that market activity has been weak as a result of the coronavirus pandemic, putting pressure on rents in central business districts.
Michael McCullough, KMC Savills managing director, said an average of 120,000 square meters in new office space is expected to come online in Cebu for 2020 and 2021, which saw the first quarter vacancy rate to hit 7.9 percent.
McCullough noted that for the period, Cebu IT Park also registered a negative net absorption which suggests that some supposed tenants “backed out of deals,” pushing its vacancy rate to 10.5 percent – an incident not seen in the last five years of the Cebu office market.
However, demand continues to rise in the area amid the need for spacious location for locators to follow social distancing, according to McCullough.
He said one of KMC Savills’ clients is currently looking for a 1,000 workstation-capable site in the area in order to observe social distancing, though only a temporary measure.
He added other companies are expected to observe the same practice which will result in more demand in office space in the area.
McCullough meanwhile said Cebu’s tourism sector may bounce back once local travel restrictions within the country are lifted.
“As soon as domestic tourism is allowed, as soon as we are freely allowed to fly from Metro Manila to Cebu, that will return. We are fortunate to have a strong domestic tourism market,” he said.
“It would be nice to have the foreign tourism market back. Obviously, a lot of hotels and resorts were focused on the Korean or Japanese markets, which we may not see for this year, unfortunately,” he added.