Demand for office space in the Bay Area is seen growing at a faster pace in the coming quarters, given the lack of developable land in established business districts nearby, a real estate services firm said.
In a statement, KMC Mag Group Commercial Leasing Manager Karen Golez noted the vacancy rates in the Bay Area office market are going to rise slightly in the coming months, as more supply to come online in the coming quarters.
“Despite current stock already hitting the 300,000 sqm mark, developers continue to pour massive investments into the area, and upcoming stock is now at 380,000 sqm in the next three years,” Golez said.
Some of the upcoming developments expected to be completed by the end of the year are the Filinvest Pasay Cyberzone Tower 2 by Filinvest Land Inc., which is expected to add 18,000 sqm of leasable space in the Bay area’s inventory.
Also, iMet BPO building by Federal Land is adding 18,543 sqm of leasable space, and the Scape building by Prince Alumer Development Corporation 19,075 square meters of leasable space.
Golez noted the vacancy rates in the Bay Area remained low in the first quarter of 2016 at 0.2 percent due to the strong interest from the business process outsourcing (BPO) industry.
“Bay Area’s central location featuring proximity to the airport and accessibility to workforce from Cavite, Parañaque, and Pasay makes it attractive to several investors and BPO companies,” Golez noted.
“Bay Area is expected to absorb some of the demand in Makati and Ortigas, as vacancy rates remains low in these areas, and there are no more developable lands,” Golez said.
Rental rates in the Bay Area are also expected to rise in the coming quarters at a slower pace.
In the first quarter of 2016, average rental rate in the Bay Area was P676.6 per sqm per month, a 3.3 percent increase year-on- year.