OFFICE rental rates in some of the country’s key business districts will keep rising over the next three years or until 2018 as vacancy rates decline due to a lack of new office stock entering the market, according to real estate consultancy firm KMC Mag Group.
In a report, the real estate services provider said several of the country’s main business districts are expected to see a decline in vacancy rates, including the country’s central business district Makati and the Ortigas Center.
KMC Mag Group noted that no new stock is expected in the Central Business District of Makati until 2018, which would cause rental rates in the district to keep on climbing.
The Ortigas Center, on the other hand, has already shown a decrease in vacancy rates in the second quarter of the year.
The report noted that although the iconic BDO Corporate Center is expected to be turned over in the next quarter, no other new leasable space is expected to enter the market until the second half of 2016.
“Other than the BDO Corporate Center, no new leasable space is expected to enter the market until the second half of 2016, which will likely keep the vacancies declining and rental growth increasing,” KMC Mag said.
However, new office stock is expected to enter the market in the other major business districts as several office developments will be turned over and more projects are being added into the pipeline.
An increase in vacancy will be experienced in Bonifacio Global City as an additional 190,000 square meters of new office space will be turned over in the second half of the year.
KMC Mag Group said this will “likely increase vacancy as the market has limited time to absorb new supply despite strong pre-leasing activity.”
It also added that construction activity in the BGC area will continue to be active, with a pipeline of one million square meters, which will double the stock by 2018.
Similarly, the Bay Area will expect a rise in vacancy in the next three quarters as a result of the turnover of a total of 120,000 square meters of new office space.
“Likewise, beyond 2016, several planned office developments such as two more E-Com towers, Aseana Three and four office towers in the 4.5-hectare DoubleDragon Meridian Plaza will keep the construction activity in the Bay Area robust,” KMC Mag said.
The report also noted that the vacancy rate in Quezon City is expected to increase as a number of new office developments are in the pipeline, such as Ayala Land’s Vertis North Corporate Center towers and the Araneta Group’s Cyberpark Tower One, which will be the first of the five-tower series.