THE DEMAND for logistics space in the Philippines is expected to grow by 160,000 square meters per year in the next decade due to a spike in e-commerce demand, real estate services firm JLL Philippines said.
The company’s research found that there is 1.7 million square meters (sq.m.) in logistics space in the country — with 424,00 sq.m. expected to be completed next year.
Dry storage makes up two-thirds of the existing supply, while cold storage accounts for 21%.
“While there is a positive demand for logistics space in the country as reflected in the uptick in transaction activity in recent years, there is an increasing demand for better quality facilities, mostly from e-commerce firms and third-party logistics (3PLs) requiring high-specification warehouses that utilize technology and digital tools as part of their operations,” JLL Philippines’ Director for Industrial and Logistics Tom Over said.
JLL Philippines’ Head of Research and Consultancy Janlo de los Reyes, in a webinar last week, said the lockdowns have slowed down the real estate sector as construction activity was halted.
“Overall, we saw close to 350,000 square meters of office space that got deferred to the second half of 2020, and around 260,000 sq.m. in Metro Manila that will likely slip to 2021,” he said.
Average vacancy levels for offices increased by 9.1% in the second quarter of 2020 due to deferred business decisions from outsourcing, Philippine Offshore Gaming Operators, and corporations.
“We do anticipate that this sentiment will remain the same in the coming quarters and will translate to minimal change or movement in the office take-up,” he said.
The residential sector was also weakened despite landlords’ term negotiations.
Average Metro Manila residential rent fell by 14.9% quarter on quarter to P1,000 per month after leasing activities were slowed down by the pandemic.
Malls that have reopened are operating at 30% to 90% after restrictions were relaxed. The vacancy rate rose by the second quarter, after some stores closed permanently.
“We saw the supply slippage of around 60,000 sq.m. of shopping mall space in Metro Manila and Davao,” he said, while another 61,500 sq.m. is at risk of slipping next year.
Mall operators, he said, are focusing on growth in areas outside Metro Manila.
“We’ve seen overall declines in the rental values in Metro Manila, Metro Cebu, and Davao. So what developers have done now is that they’re offering much more flexible lease terms.” — Jenina P. Ibañez