Lobien Realty Group
Sees Growth in office property market
The office property market is experiencing good times based on data and current sentiment in the market.
In its latest study, the Lobien Realty Group (LRG) cited the following reasons for the growth of the office sector:
n Back-to-office directive for those BPO’S operating in PEZA areas which will increase demand by approximately 400,000 sq.m over the next six months;
n Mobility is back which allows companies to operate prepandemic levels which will restart growth and increase labor demand, and consequently, office spaces; and
n Post-pandemic office arrangements that will require larger office spaces to ensure social distancing to pandemic-proof office spaces.
Although hybrid office arrangements are expected to be instituted by several companies, LRG said it would not have a significant impact on the office space market due to the several challenges facing the telecommunications infrastructure and the preference of local businesses for physical presence of employees in the offices.
Occupancy rate in MM’S office spaces remain strong at 81 percent
LRG observed that Metro Manila’s office market has managed to survive all the local and global challenges and is poised to a strong recovery starting in the fourth quarter of 2022.
According to the data culled from the first half of 2022, vacancy rate in office space for Metro Manila stands at 19 percent with the remaining 81 percent leased.
Moreover, there will be an improvement in the demand for office space in Metro Manila and will be adequately met by the office space supply in the pipeline which is currently pegged at 1.7 million sq m.
“The business process outsourcing [BPO] sector is the biggest growth driver for office space in Metro Manila representing 46 percent, online gaming demand dropped to 1 percent due to several regulatory issues and the lockdowns implemented during the pandemic, and a variety of other industries represent the remaining 53 percent of Metro Manila office space demand drive,” LRG explained.
Makati, Taguig, and Pasig are the leading players in the office
market. By the end of 2021, Makati delivered the largest supply of office space with a total of 2.8 million sq m, with an identified pipeline of 307,000 sq m which is expected to be completed from 2022 until 2028. Using the same time frame and premise, Taguig has an office space supply total of 2.7 million sq m, with 250,000 sq.m of office space in the pipeline and total office vacancy of 250,000 sq m, while Pasig has a total of 2.0 million sqm of office space supply, 139,0000 sq m in the pipeline, and 388,000 sq m of total office space vacancy.
Metro Manila’s five other growing business districts are Mandaluyong, Quezon City, Alabang, Bay City, and Parañaque. Mandaluyong has 890,000 sq m of total office supply space, no office space supply in the pipeline, and 280,000 sq m total office space vacancy. Quezon City is fast becoming a prime business location with 1.8 million sq m of total office space supply, 413,000 sq m of office space in the pipeline, and 763,000 sq m of total office space vacancy.
Alabang has 774,000 sq.m of total office space supply, 141,000 sq.m office space supply in the pipeline, and total office space vacancy of 295,000 sq m. Bay City boasts of 978,000 sq m of office space supply in total of 323,000 sq.m supply in the pipeline, and office space vacancy totaling 618,000 sq m. Parañaque’s office space supply amounts to 330,000 sq.m, 81,000 sq m of office space in the pipeline, and vacancy of 274,000 sq.m of office space.
The Provincial Office Property Market
LRG said Metro Manila, Metro Cebu, Metro Clark, Metro Bacolod, Davao City, and Iloilo City are the country’s center of excellence while Baguio City, Cagayan de Oro City, Dagupan City, Dasmariñas City, Dumaguete City, Lipa City, Malolos City, Naga City, Sta. Rosa City, and Taytay Rizal are categorized as the next wave cities or alternative investment hubs outside Metro Manila which promote country-wide improvement, create job opportunities and economic advancement in their respective regions
LRC pointed out there are good potentials as there is a 25-percent vacancy rate across all provincial business districts and 500,000 sq m of provincial office space supply currently in the pipeline. Average rent of provincial office space stands at P 610/sq.m. “This, plus the availability of labor supply in the provinces, makes provincial offices an attractive alternate office location,” LRG said in the study.
Finally, LRG said the online gaming locators might return to the Philippines which is expected to significantly increase office space demand because of clearer regulatory and taxation guidelines and the easing of mobility restrictions due to high vaccination rates and non-recurrence of Covid-19 surges.