Amid a generally weaker regional office market
DRIVEN by strong pre-leasing activity, Metro Manila stood out in the Southeast Asian office market toward the end of 2015, global property services firm Jones Lang Lasalle (JLL) said.
In its Asia Pacific Property Digest 4Q 2015 released recently, JLL said all Southeast Asian markets saw weaker leasing activity late last year due to slower economy, except for the Philippines’ capital region, as many of the new office buildings were pre-committed at that time.
According to JLL, office leasing improved in the Asia Pacific region during the fourth quarter of 2015, with gross leasing volumes going up by 23 percent year-on-year, while full-year leasing volumes increased by 19 percent.
JLL said China and India were the most active across the region, driven by technology, domestic financial firms, and business process outsourcing sectors.
It said Australia, Sydney, and Melbourne, meanwhile, saw a good recovery in occupier demand.
Despite the optimistic quarter for Asia Pacific, JLL said the Southeast Asian markets observed weaker leasing activity during the period, due to slow economic activity and weak resources sectors.
But JLL said Manila was an exception, as strong levels pre-commitment for office buildings drove the industry.
JLL noted that the pre-leasing trend has helped ease the impact of new completions in the market.
“Strong pre-commitment rates mitigated the impact of new supply on vacancy in markets such as Tokyo and Metro Manila,” JLL reported.
“Strong pre-commitments to new completions keep net absorption relatively high and vacancy rates low,” Claro Cordero Jr., JLL’s head of research in the Philippines, explained.
The JLL report said Grade A office stock across the region increased by 65 percent, as 5.6 million square meters of office space were added in 2015, mainly in China and India.
Despite the new supply, vacancy rates in Asia Pacific remained relatively low at the end of 2015, JLL said.
“Vacancy rates are low in many of the major markets, with Hong Kong Central’s rate of 1.2 percent,” the report said.
In Metro Manila, net absorption in the Makati central business district and Bonifacio Global City (BGC) remained high during the last quarter of 2015 at 67,700 square meters.
This was on the back of “an increase in occupancy at established buildings and high pre-commitment levels in recently completed development,” JLL said.
Despite the completion of several office developments in the fourth quarter, vacancy rates slightly dipped to 4.6 percent from the 4.7 percent in the third quarter of 2015.
The period saw the completion of three office buildings, namely, Uptown Place Tower 1, BGC Corporate Center, and AO United Life Building. These three added a total of 69,400 square meters of new office space to the market.