The office market take-up within and outside Metro Manila will rebound because of projected lower rents due to global economic recession and increase in available supply, according to property consultancy Lobien Realty Group (LRG).
In a report, LRG said it expects an increase in demand for space from the business process outsourcing (BPO) sector as 50 percent of the players are experiencing growth, with global companies seeking more cost leverage.
Metro Manila office vacancy is currently a 6.4 percent with supply as of the third quarter totalling 739,312 square meters (sq.m.) while available supply amounts to 343,317 sq.m. which means 54 percent of all office spaces in Metro Manila remain leased. Another 3 million sq.m. of office space supply are presently in the Metro Manila pipeline with average rent at P1,190 per sq.m.
LRG said BPOs lead the demand drive for office space in Metro Manila representing approximately 32 percent followed by gaming, 29 percent, while other industries comprise about 38 percent.
LRG also believes temporary offices in co-working spaces and provincial operations will be part of BPO business continuity strategy. At present, there are 110 co-working spaces in Metro Manila. Total co-working spaces amount to 350,000 sq.m. representing 9,786 total workstations available as of September.
For the landlords, LRG said this is the best time to take advantage of the low-interest regime.
The LRG report said the vacancy rate in the office market across all provincial business districts is much higher at 16 percent
In the third quarter of 2020, total supply of provincial office space is 293,325 sq.m. while available supply is 238,766 sq.m., which means only 20 percent of existing provincial office space is leased. Average rent is P620 per sq.m. for these office spaces.
In other segments, LRG projects the residential property market will have increased importance as work-from-home and online schooling become the default social distancing solutions of the government for companies and schools.
In the report, LRG said it expects an increase in demand for single detached homes and lots (outside of Metro Manila) and mid-to- higher end/low density condominium developments in the central business districts or CBDs that are closer to place of work will be good opportunities for developers.
LRG expects more township developments aimed at providing pandemic-proof work and residential lifestyles but insists that condominium units and dormitories within the CBDs will still have a market for employees who need to address transport and no-work/no pay issues.
For the logistics/warehousing market, LRG believes the increase in e-commerce sales will be the main driving force behind the growth of the logistics and warehousing industry.
Companies involved in the fast-moving consumer goods, retail and e-commerce will be looking for the best warehouse locations to lower their costs and cut delivery time to customers, as the main customer base of many companies is still concentrated in Metro Manila and nearby provinces, preferred warehouse locations should be within Metro Manila, Pampanga, Bulacan, Cavite and Laguna.