Office vacancies in NCR to persist till 2025–report

By VG Cabuag @villygc

City (BGC) accounted for more than half of annual demand at 141,000 square meters and is expected to be the main driver of Metro Manila’s performance this year.

“We forecast net absorption to slightly increase in 2023, but may be isolated in the top submarkets, such as Makati CBD, or tigas Center, Quezon City and Bay a rea in Manila,” KMC Savills said.

it said there is an office supply glut in Metro Manila.

each other with better incentives. However, newer buildings are at an advantage as tenant demand shifts towards quality and competitive rates.” it said, however, that average rents slid by 3.4 percent year-on-year, as the aging building stock dragged the submarket.

Meanwhile in BGC, the preference for the location has allowed landlords to enjoy single-digit vacancy rates.

Frederick r a ra, the company’s senior manager for research and consultancy, said developers should not expect occupancy rate to return to above 85 percent of office stock during the next two to three years. He said the top submarkets may possibly avert a prolonged office supply, but the Makati central business district (CBD) and ortigas Center are still at risk if office demand from the business process outsourcing sector loses steam in favor of provincial markets.

“We maintain our recommendation to landlords to prioritize occupancy over yields in 2023.” last year, the Metro Manila office market rebounded with a net absorption of about 270,900 square meters, a reversal of the negative take-up in the previous year, the company said. More than a third of the demand was recorded in the fourth quarter as rents continued to decline, which at the end of the year, was down by 0.8 percent.

Demand from Bonifacio Global a long ayala avenue, the competition between premium buildings persists as landlords try to outplay

“With almost 1.7 million square meters of vacant Grade a office space, another 1.2 million square meters in the pipeline, changing occupier strategies and rising interest rates, the office market is in an unsustainable condition at these rates,” the company said in its research note.

For the Makati, there was a huge demand for one ayala buildings, located at the former site of the intercontinental Hotel, as vacancy rate was pulled up to 15.7 percent.

“We remain positive in our outlook for BGC as it dominates the Metro Manila (office sector). a round 160,000 square meters of green buildings are expected to be completed in 2024, or more than twothirds of the supply.” it also advised investors to put their money instead in bonds rather than the residential market as this sector is expected to be shaky through next year.

For the residential market, the middle market products that are due to be turned over this year and 2024 should be closely monitored as there is a risk of defaulting among buyers.