Office sector recovery slower this year — Prime Philippines

THE OFFICE SPACE sector is expected to experience a slower rate of improvement this year, real estate consultancy firm Prime Philippines said.

“What we are seeing is that by 2024, this [trend] would continue to improve slightly as there are new supplies [entering] the market, possibly reaching around 80% to 85%,” Prime Philippines Chief Executive Officer and Founder Jettson “Jet” Yu said at a briefing last week.

The Bay area’s recovery is slow, facing significant challenges primarily due to the removal of Philippine Offshore Gaming Operators, he added.

In 2023, Bonifacio Global City had the highest occupancy rates at 89%, followed by Ortigas central business district (CBD) at 85%. A net take-up of 12.6 million square meters (sq.m.) was recorded by the end of the year.

According to Prime, major projects by 2024-2025, such as One Vertis Plaza in Quezon City, Cyberpark 3 in Araneta City, 378 Filinvest in Makati CBD, and others, will increase the office supply of Metro Manila to 13 million sq.m.

It also anticipates a gradual uptick in demand this year and potentially reverting to pre-pandemic numbers from 2018 to 2020, then reaching the same level by the year 2026.

In 2023, Metro Manila office supply went up by 3.3% to 12.6 million sq.m.

It said premium-grade buildings grew 9% year on year.

Prime expects the information technology and business process management industry to grow by 7% this year, from an 8% growth to $35.4 billion in revenue, according to IT and Business Process Association of the Philippines President Jack Madrid.

He said that an additional 130,000 jobs may be generated in 2024, up from the 1.7 million jobs achieved in the previous year.

Prime also saw an increase in rental rates, buoyed by higher pickups in CBD areas.

In line with this, Prime anticipates a flightto-quality phenomenon due to the expanded supply and the diverse selection of premiumgrade properties.

Mr. Yu also noted the emergence of the walk-from-home trend, suggesting a demand for walkable offices in key cities such as Iloilo, Bacolod, Davao, and Pampanga.

“In the US, for the past three to four years, there has been a growing realization among companies about the advantages of nearshoring. These countries are typically in South America,” he said.

He cited key advantages, such as much of the population in the US being Latin American and already having the preferred accent and a closer language.

However, Mr. Yu said that American clients are convinced it will take time before Mexico and the Dominican Republic catch up to the level of “prime” services offered by the Philippines.