A large chunk of office space coming online has been pre-committed, according to property analysts, saying the office market is forecast to remain the top performing property sector this year.
“My outlook for 2017 is that the office market will continue to be good because 40 percent of all the space due for completion in 2017 is already leased out,” Leechiu Property Consultants (LPC) CEO David Leechiu told The Manila Times in a recent interview.
A total of 461,000 square meters to be completed this year were pre-committed as of November 2016. This translates to around 35.18 percent of the 1.3 million sqm of new office space to come online in Metro Manila this year.
“A strong preleasing trend also ensures that demand will remain robust in the short term, so developers won’t have to worry much about declining rental rates at least for the next 12 to 18 months,” Colliers International Philippines noted in another report.
“Pre-leasing activities enable developers to plan for future projects, as buildings under construction are already significantly leased-out,” Colliers said, noting that preleasing gives clients the opportunity of getting competitive rates.
KMC Savills Inc. Head of Research Antton Nordberg said the office property market will be the top performer this year, even if growth is expected at a slower pace.
“That is because the supply cycle is beginning. There are huge quantities of supply coming online, which will obviously put pressure on rental growth,” Nordberg said in an earlier interview.
No matter how fast or slow the pace there will be growth, KMC Savills Associate Director Gerold Fernando noted. “There’s still growth. I think the overall growth we see in 2016, it’s going to continue in 2017.”
International companies will definitely help spur the office market, Fernando noted. “There has been a mix [in 2016]. From just the third party outsourcers, we saw a lot of captives that went inhouse in 2016. And I think this is going to continue,” he said.