Property consultant Colliers expects vacancies to close at 20.5 percent by the end of the year.
Still, Kevin Jara, Colliers director for office services–tenant representation, said the company has seen “noticeable improvements in transaction volumes,” particularly from the information technology-business process management sector and traditional office space occupiers.
“We think the market remains to be stable. And we are still confident to see more opportunities arise, even with upcoming events in the US elections and with impending legislation such as the paper,” Jara said in a briefing last week.
Vacancy in the third quarter settled at 18 percent, bringing the nine-month vacancy average to 18.5 percent, he added.
Metro Manila had a total office space stock of 14.5 million as of end-September.
“We had a positive net take-up for the nine months, 140,000 square meters (sq.m.),” Jara said, but noted a 33,000 sq.m. space had been vacated as Philippine offshore gaming operations (POGO) exited the country.
“We would have reached 173,000 sq.m. in net take-up for the third quarter, if not for the exits from the POGO,” he said.
“We anticipate vacancies to continue to rise to 20.5 by the end of the year. And a flat net demand for the market mainly due to the post exiting of POGOs.They have a deadline to exit,” Jara added.
According to Colliers, a total of 57,000 sq.m. of POGO-occupied spaces have been vacated.
“We are expecting another 157,000 sq.m. to exit the leases by the fourth quarter. So these are the ones that we know and (which) have officially notified their landlords that they’re not renewing their lease. The total number that would be left would be 275,000 sq.m.,” Jara said.
POGO’s contribution to total occupancy in Metro Manila has dropped to 2 percent in the third quarter compared to the prior period’s 3.3 to 5 percent, he added.
Meanwhile, Colliers noted a respectable 192,000 sq.m. in new leases in the third quarter, higher than the average quarterly transaction volume between 2022 and the third quarter of the year.
“Third-party outsourcers improved 37 percent year-on-year; shared services, 19 percent. The number is actually even more pronounced when you look at quarter-by-quarter…87 percent for third- party outsources and 130 percent for shared services,” Jara said.
“The data showed (new leases are) actually improving from what we last reported in the previous report. It’s also heartening to note that expansions are the primary motivation of getting office space,” he added.
Colliers expects another 119,000 sq.m. of office space to come online in the fourth quarter.
By next year, 615,000 sq.m. are expected to come online, before tapering down in 2026 and 2027.
“We’re expecting 615,000 sq.m. of new office in 2025 coming from Cubao, Quezon City and the Bay Area,” Jara said.
Colliers also sees rent remaining flat for the year, with select areas likely experiencing a decline. “It’s going to be an increasingly situational scenario. It really depends on the building occupancy, the portfolio situation of the landlord that’s leasing the space,” Jara said.
