DEMAND for office space in Metro Manila is predicted to rise 11 percent this year based on strong demand seen in the first quarter alone, real estate services firm Colliers International said.
In a report, Colliers said it expects year-end demand levels for office space to grow to 704,000 square meters, based on demand in the first quarter which reached 155,000 square meters.
“Similar to previous years, demand is expected to increase significantly towards the tail end of the year,” Colliers said, saying that demand is expected to pick up by the second half.
Colliers reported strong pre-commitment levels in the first quarter, with 52 percent of the buildings in Metro Manila set for completion this year already pre-leased out.
“Pre-leasing for buildings to be completed by 2016 has already increased from 43 percent from Q4 2015 to 52 percent in Q1 2016,” the report said.
It also noted that pre-leasing for buildings to be completed in 2017 has already started, adding that 44 percent of buildings to be completed this year until the first quarter of 2017 have already been pre-leased.
Meanwhile, Colliers revised its new office supply forecast for 2016 to 760,000 square meters from the 880,000 square meters predicted at the end of 2015, due to some projects being slated for completion at the last quarter of 2016 being delayed to early 2017.
“This shows that there is ample space to absorb the expected demand through 2016,” Colliers said. “This assumes, however, that there will be no significant delays in construction which will push completion dates further to 2017.”
Some of the major projects that slipped past their completion date are Vector 3, South Park and Vertis Tower 1.
It also noted that vacancy levels in Metro Manila remained low during the first quarter of the year at 3 percent, and is expected to remain low until 2017.
“Despite this, there continue to be opportunities for companies to expand within Metro Manila, considering that supply levels are still at historical highs,” Colliers said.
The real estate services firm expects the Quezon City and Alabang office markets to develop into alternative locations for BPO [business process outsourcing]companies, as it expects an influx of new office stock in these locations in the next two years.
“Rental rates in these locations are within acceptable thresholds for BPO/contact center companies, making them viable options,” Colliers concluded.