Manila office rents inch up 1.1% in Q3 | Real Estate Asia

Manila office rents inch up 1.1% in Q3

Leasing demand improved as companies returned to office.

JLL reveals office rents in Manila increased 1.1% q-o-q to PHP 1,136 per sqm per month as leasing demand improved. 

“The majority of landlords have maintained rents, although better performing assets increased their rates during the quarter. Select landlords are also narrowing the gap between their headline and transacted rents as the market stabilises,” the analyst adds.

Here’s more from JLL:

Capital values maintained momentum and settled at PHP 179,396 per sqm, an improvement of 1.5% q-o-q, despite lacklustre sale demand. Although minimal movement in take-up was recorded, the limited office inventory for sale and nearing completion dates of pipeline developments have driven landlords to increase their prices.

Leasing volumes expand as RTO rates and business expansion pick up

Net absorption recorded 33,800 sqm, sustaining a positive trajectory as the return-to-office (RTO) trend continued, and key market drivers expanded. Business process outsourcing (BPO) players accounted for most transactions, including a 20,000 sqm, a 16,000 sqm and a 11,500 sqm lease in Taguig City. Corporate occupiers and Philippine offshore gaming operators (POGOs) also contributed slightly.

Move-out rates have slowed down, contributing to the contraction of vacancy levels despite added supply. Examples of downsizing and consolidation from corporate occupiers included a financial services firm vacating a 12,200 sqm space, and a FMCG company in Bonifacio Global City pulling out from a 2,800 sqm space. A BPO also vacated a 8,500 sqm space in Bonifacio Global City.

Completion of one development bumped up supply by 23,300 sqm

The completion of Manta Corporate Plaza in Taguig City lifted supply by 23,300 sqm in 3Q22. Other developments set to go online in the quarter include Makati Commerce Tower and PMI Tower in Makati City, as well as Sennett Corporate Center, and MKTan Centre in Taguig City, which are anticipated to expand end-2022 supply by 105,200 sqm.

Vacancy levels recorded sustained recovery, settling at 11.5%, a contraction of 28.2 bps q-o-q. The relaxed mobility restrictions are driving accelerated RTO rates and continuous business expansion, and the stabilisation of the market encouraged firms to close leases during the quarter, improving vacancy rates.

Outlook: Weaker leasing demand possible as BPOs allow WFH

Slowing leasing volumes are anticipated as the Fiscal Incentives Review Board now allows BPOs to maintain hybrid work arrangements without tax repercussions until December 2022. BPOs are now also allowed to transfer their registration from the Philippine Economic Zone Authority to the Board of Investments, hence full work-from-home (WFH) can be implemented while still enjoying fiscal incentives.

Rental and capital values are projected to maintain their upward trajectory, although this will likely be tempered on the back of a potential deceleration of demand.

Note: Manila Office refers to the Makati City and Taguig City Grade A office market.

 

Follow the link for more news on

Join Real Estate Asia community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

Exclusives

How Metland Indonesia deals with weaker residential purchasing power
The real estate firm continues to expand with residences that are attractive to consumers because of pricing, the ‘growing house’ concept, and sustainable features.

Event News

Event News

Real Estate Asia Awards 2023 Winner: Henderson Land Development Company Limited
Henderson Land Development Company Limited wins big at the Real Estate Asia Awards 2023 taking home 3 notable accolades, the Developer of the Year, Mixed-Use Development of the Year, and Residential Development of the Year awards for Hong Kong.
Real Estate Asia Awards 2023 Winner: Henderson Land Development Company Limited
Henderson Land Development Company Limited wins big at the Real Estate Asia Awards 2023 taking home 3 notable accolades, the Developer of the Year, Mixed-Use Development of the Year, and Residential Development of the Year awards for Hong Kong.