OFFICE space rent in Metro Manila office is slowing in the next 12 months due to a number of building completions, according to a real estate services group.
Cushman and Wakefield Philippines reported the average asking rates in the Metro Manila office market grew by 0.5 percent in the first quarter of 2016 to P769 per square meter a month from P765 per square meter in the fourth quarter of 2015.
“Rental rates are projected to maintain their upward trajectory, albeit growth may begin to slow as more buildings are completed in the next six to 12 months,” the report said.
Data from real estate services firm Jones Lang Lasalle showed that 910,100 square meters of new office space are ready for market this year alone.
Still, Cushman and Wakefield noted a strong demand from the business process outsourcing (BPO) industry.
“Despite the massive supply pipeline, vacancy levels are projected to keep within single digits due to solid pre-commitments in upcoming buildings and projected healthy demand for office space,” Cushman and Wakefield said.
A decline in vacancy levels was observed in the first quarter of the year. Overall vacancy rates in Metro Manila declined by 110 basis points from 3.4 percent in the previous quarter to 2.4 percent in the first quarter of 2016, according to Cushman and Wakefield.
This was mainly driven by a lack of new supply from the delays in building completions.
“The business process outsourcing sector remains as a primary demand driver, while there was also some expansionary and relocation activity from other industries,” the report noted.
Net absorption also increased in the first quarter at 56,000 square meters compared with 39,000 square meters in the previous quarter.
“A global design and consultancy firm leased roughly 5,400 square meters (sq.m.) of office space at Tower 6789 in Makati City.
“An online gaming company expanded operations, leasing 1,300 sq.m. of office space at Tower 6789,”the report said.
A marketing firm relocated to a 1,700 sq.m. office space at 8 Rockwell in Rockwell Center, and two pharmaceutical and medical firms took up 1,000 sq.m. each at One World Place in Bonifacio Global City.