Home Editors' Picks Solid demand for office space seen this year
Solid demand for office space seen this year
THE OFFICE sector is expected to sustain its growth this year, with the expected delivery of 1.2 million square meters (sq,m.) of new office space.
In a media briefing in Makati on Jan. 29, officials from real estate consulting agency Santos Knight Frank identified several trends that will affect the industry this year.
“In 2019, Santos Knight Frank forecasts continuous growth in rent as demand remains strong. More office space will be infused into the market and accommodate the demand,” Santos Knight Frank said of the office sector.
In an email to BusinessWorld, a company representative said of the expected new supply, 34% will come from Quezon City, 20% from Makati City, 18% from Taguig City, 13% from Ortigas, 10% from the Bay Area, and 5% from Alabang.
Rick M. Santos, chairman and chief executive officer of Santos Knight Frank, noted as office rental rates increase in Metro Manila, more multinational companies will expand in other areas such as Metro Clark, Metro Cebu, Davao, Iloilo, and Bacolod.
“More third party BPO (Business Process Outsourcing) providers will expand to provinces amid the rental growth in Manila, while the global captive centers remain and continues in the capital,” he said during the briefing.
In its report, Santos Knight Frank said office rental rates in the Metro have increased 9.38% year-on-year to breach the P1,000 per square meter (sq.m.) level to P1,042.35 per sq.m. in 2018.
Another trend cited by Santos Knight Frank is the “co-working phenomenon.” It cited 135 locations, mostly in Makati and Taguig, that are categorized as co-working, serviced and shared offices.
Aside from Regus, international players such as New York’s WeWork, Malaysia’s Common Ground have entered the market. Local developers have also opened co-working spaces, namely Ayala Land, Inc.’s (ALI) ClockIn and Robinsons Land, Corp.’s (RLC) work.able.
The boom in co-living spaces is also expected to continue this year, Santos Knight Frank said. The sector will be supported by additional supply from ALI’s The Flats, and MyTown of SM Investments Corp. (SMIC) and Philippine Urban Living Solutions, Inc. (PULS). Other new projects include First Georgetown’s GRID in Makati City, and Centro nin Kaaram in Naga City.
“Gentrification is driving new developments on the fringes of financial districts, such as Bonifacio Global City and Makati, where co-living spaces are built for employee housing,” Santos Knight Frank said.
It noted there has been renewed attention to the C5 corridor. Among the new townships in the area are Megaworld Corp.’s Arcovia City, Parklinks of ALI and LT Group, Inc., and RLC’s Bridgetown Business Park.
Santos Knight Frank also expects the growth in tourism to boost the hospitality industry. It forecasts the addition of 6,400 hotel rooms until 2023 in Metro Manila, with 2,900 rooms expected in 2019. The bulk of the supply will be in the Bay Area.
For retail, Santos Knight Frank sees both e-commerce and traditional malls thriving. For traditional malls in Metro Manila, there will be an additional 250,000 sq.m. of space, or a 5% growth from current stock.
“The growth of e-commerce has led malls to follow different strategies. For instance, community malls such as CityMall (DoubleDragon Properties Inc.) have focused on basic necessities. Most malls in Metro Manila focused on experiential shopping, adding more or renovating existing space for international brands, co-retail, pop-up concepts and dining,” it said.
Santos Knight Frank also noted that more developers are going into the industrial and logistics sector, amid the dearth of supply of warehouses and industrial parks.
Developers that have ventured into this sector are ALI, DoubleDragon, Anchor Land Holdings, Inc., and Metro Pacific Investment Corp. through its subsidiary Metropac Movers, Inc. — Vincent Mariel P. Galang