By Vincent Mariel P. Galang
METRO MANILA’S supply of Prime and Grade A office space grew by about 170,000 square meters (sq.m.) in the first quarter of the year, with more than half located in Makati City, commercial real estate services company Cushman & Wakefield Philippines said.
In its first quarter 2019 Office Marketbeat report, Cushman & Wakefield said 168,156 sq.m. of Prime and Grade A office space was finished in the January to March period, bringing total supply to 7.162 million sq.m.
Of this new supply, 52% came from Makati City, 27% from Muntinlupa City, and 21% from Quezon City.
One of the newly completed buildings is NEX Tower, located along Ayala Avenue in Makati City. The tower, which was developed by Nova Group has 28 floors, with a typical floor area of 1,400 sq.m.
In terms of the 7.162 million sq.m. total supply, Taguig City accounted for most of the inventory at 2.097 million sq.m. This was followed by Makati City with 1.416 million sq.m.; Pasig City with 1.111 million sq.m.; and Quezon City with 1.074 million sq.m.
Muntinlupa City has an inventory of 568,688 sq.m., while Pasay City has 545,964 sq.m.; Mandaluyong City with 272,701 sq.m.; and Parañaque City with 74,417 sq.m.
The average asking rent for Prime and Grade A spaces in Metro Manila jumped by 8.6% to P946 per square meter per month (/sq.m./mo.) during the first quarter of 2019 from P871/sq.m./mo. during the same period in 2018. Quarter-on-quarter, rental rates grew by 5.2% from P899 per sq.m. in the fourth quarter of 2018.
“The increase can primarily be linked to the annual escalation of rents that is usually applied at this time of the year,” it noted in the report.
Office spaces in Taguig City command the highest rent rates with an average of P1,201/sq.m./mo. Rent rates in Makati City stood at P1,195/sq.m./mo., followed by Parañaque City at P1,050/sq.m./mo.; Pasay City at P941/sq.m./mo.; Quezon City at P854/sq.m./mo.; and Muntinlupa City at P804/sq.m./mo.
Mandaluyong and Pasig had the lowest rent rates at P786/sq.m./mo. and P734/sq.m./mo., respectively.
“Typical annual rent escalation is 5%, and this is usually applied at the first quarter of the year for vacant spaces. Among the Metro Manila markets, Parañaque City has the biggest quarterly increase of 25.4% because of high asking rents from the limited vacancy in its existing buildings,” a company representative told BusinessWorld in an email.
In terms of vacancy, Quezon City had the highest rate at 9.9%, followed by Mandaluyong City at 7.1%; Taguig City at 5.5%; and Makati City at 1.9%. Other cities recorded vacancy rates below 1%, bringing overall vacancy rate in Metro Manila to 4%.