UPSCALE Bonifacio Global City within Taguig City south of Metro Manila has eclipsed the Makati central business district in terms of the amount of Grade A office space they host, global property advisor Cushman and Wakefield reported.
Cushman and Wakefield said almost 340,000 square meters of office space were made available in the market in the fourth quarter of 2015, bringing total office space supply in the Philippine capital region to 4.9 million square meters.
“Majority of the new stock came from Bonifacio Global City, which has allowed Taguig City to eclipse Makati City in terms of total existing Grade A office space,” said Cushman and Wakefield’s report, titled Marketbeat: Office Snapshot Q4 2015.
Cushman and Wakefield foresees 2016 to see slower rental growth in Metro Manila’s offices, weighed down by more upcoming supply.
“In the next 12 months, we may see slower rental growth, as upcoming supply may put downward pressure on rents,” said Janlo de los Reyes, Cushman and Wakefield Philippines’ manager for research and consultancy.
In view of the huge increase in office stock, the real estate services firm expects vacancy to rise this year, although robust occupier demand can keep this in check.
“Vacancy is likely to rise due to large increases in office stock, although healthy demand—particularly from business process outsourcing (BPO) firms—may keep vacancy within single digits,” de los Reyes said.
Cushman and Wakefiled noted that in the four quarter of 2015, the average vacancy rate in Metro Manila went up slightly to 3.4 percent, from 1.5 percent in the third quarter, due to the large volume of new completions.
The firm reported that the average asking monthly rent in Metro Manila went up by 1 percent quarter-on-quarter to P765 per square meter, as some landlords raised their rates on the back of still strong leasing demand.
“Demand for office space nonetheless remained solid, with BPO tenants continuing to be the driver of leasing activity,” Cushman and Wakefield’s report said.
The report noted that the market absorbed around 250,000 square meters of office space in the fourth quarter.
One of the notable leases made during the quarter was by human resource outsourcing firm Synchrony Global Services, which leased out 10,300 square meters at the newly completed Filinvest City in Muntinlupa City.
“Harte Hanks and EXL Service Philippines also expanded, leasing 2,500 square meters and 2,000 square meters, respectively, at Five E-Com Center in Pasay City,” the report cited.
Kuehne + Nagel, a logistics company, also signed a deal for 4,500 square meters at Five ECom Center, it added.