REAL estate consultancy firm Colliers International said it now expects the Metro Manila office market to maintain its strength in the months ahead amid lower-than-expected supply due to delays in the completion of some office developments.
“Last year, we had a stance when we thought the office market would soften. That trend did not take hold,” said Julius Guevara, Colliers International director for research and advisory.
Guevara told a property market briefing on Wednesday that the predicted softening of the office market this year did not materialize as office developments set to be completed during the quarter have been delayed.
Late last year, Colliers had forecast that the Metro Manila office property market could witness a rise in vacancies and as well as a drop in rental rates by 5 percent due to the large amount of new office space set to enter the market in the next few years.
“We have changed our position because in the first quarter of 2016, a lot of new office projects that have been scheduled for 2016-2017 have been pushed back,” Guevara said.
As a result, Colliers has revised its supply forecast for 2016 from 700,000 square meters
to around 640,000 square meters.
Jie Espinosa, Colliers executive director for office services, said that delays in project completion are a normal trend. “That thing happens all the time,” Espinosa said.
“A lot of developers have verbalized that they have a lot of projects going on. And they feel pressured in terms of supply of construction workers. That’s why there could be a slowdown in some of their projects. Some of them might be purposive in nature, they could say let’s adjust because there’s a looming oversupply in the market,” Espinosa added.
While Colliers anticipates a rise in vacancies, this is expected to remain low, Guevara said.
“We do anticipate some small increases in vacancy rates. It’s still quite low at below three percent at the end of the year. However, in 2017 we will see more than 900,000 of usable area, vacancies will rise about 5 percent—but that five percent is still very low,” he stressed.
Guevara said another factor supporting the strength of the office market is the continued demand for office spaces, with 89 percent of office buildings completed in 2015 having already been leased out.
“Furthermore, of the buildings that are to be completed in 2016, more than half are already pre-leased. This is reflective of the BPO [business process outsourcing]market,” Guevara said.