INCREASED GOV’T SUPPORT SOUGHT
Aproperty services firm has urged the Philippine Economic Zone Authority (Peza) to fast-track the release of building proclamations to meet the growing demand for office space, particularly by the IT and business process management industry.
According to Pronove Tai International Property Consultants, Peza issued only five building proclamations in Metro Manila in the last 14 months, out of the 22 building applications.
It pointed out that IT-BPM companies occupy office spaces in the Peza proclaimed buildings to meet their infrastructure as well as incentive requirements. In essence, slow building proclamations mean slow take up from the IT-BPM players.
“PEZA proclamations should be fast tracked. The private sector has already put in the investment, and so we urge the government to help us now with the letters of no objection for Philippine offshore gaming operators and Peza buildings for IT-BPM,” Pronove Tai CEO Monique Pronove explained in a statement.
“Or else we’ll have a growing vacancy because I can’t bring all of this demand to all these buildings. It will be a bane to the private investors of newly built buildings to have growing vacan- cies as a result of not being able to cater to the demand drivers due to government restrictions,” Pronove stressed.
Healthy average
Pronove further noted that while the local office market vacancy rates and construction delivery have improved, demand drivers could use more support from the government.
As of the end third quarter this year, the office market vacancy in Metro Manila registered at a healthy 5 percent average, for the first time since 2011, according to Pronove.
“Anything between 5 to 10 percent is considered healthy in the industry—sufficient space for businesses to expand within the district,” she said.
Based on property consultancy firm’s Q3 Metro Manila Office Market Overview, five office districts moved out of the unhealthy zone or those with office vacancy rates lower than 5 percent. These were Taguig, Mandaluyong and Quezon City at 7 percent, Muntinlupa at 8 percent, and Ortigas Center at 5 percent. Meanwhile, Makati and Bay Area trailed at 2 percent.
Marked improvements
According to Pronove, this positive development in the vacancy rates could be partly attributed to a marked improvement in construction delivery in the third quarter. Projects that were delayed in the first half of the year were completed in the third quarter.
The report also noted that scheduled construction activities were kept on track for the most part with only 43,000 sqm or 11 percent of the projected third quarter completions moved to an early fourth quarter date.
“This positive, though modest, development is definitely a move towards the right direction and could not come at a better timing. Some of these buildings were long overdue and have pre-leased occupants waiting for completion,” Pronove said.
Twelve new buildings or about 331,000 sqm of office space were completed in the third quarter, contributing to a total stock of approximately 9.3 million sqm of gross leasable area (GLA) as of end September 2017.
“By the end of the year, we are looking at having a total of 1.2 million sqm supply for 2017, making it the highest in the history of the Philippine office market,” Pronove added.