Steady rates expected for prime developments in CBDs — Cushman & Wakefield
THE OFFICE VACANCY in Grade A and prime offices in Metro Manila rose during the first quarter, according to real estate services firm Cushman & Wakefield.
Office vacancies in Metro Manila increased to 16.53% from 16.16% between the first quarters of 2024 and 2023, Cushman & Wakefield said in a statement last week.
It expects vacancy rates to stay between 15% and 20% in the near to medium term.
This is because of the combined impact of new completions, the return of spaces from right-sizing initiatives by major occupiers, and the delayed expansion plans of certain information technology and business process outsourcing management (IT-BPM) firms, the real estate agency said.
“Despite the setback in overall market vacancies, we are optimistic that the commercial real estate market in Metro Manila will continue its recovery, albeit at a slower pace, for the remainder of 2024,” said Tetet Castro, director and head of Tenant Advisory Group at Cushman & Wakefield.
Meanwhile, the total supply is expected to increase by 0.44 million square meters (sq.m.) in the second quarter but completion delays are imminent.
The real estate agency also noted that the recovery of office space absorption in the office segment hit a snag due to delays in the expansion decisions of local IT-BPM companies.
The negative net absorption of roughly 25,000 sq.m. was due to slower take-up in the first quarter. Ms. Castro noted that average asking rates fell to P1,012 per sq.m. per month from P1,023 per sq.m. in the last quarter as high market and building vacancy rates rose.
The report said that despite a decline in headline rent, the majority of prime and Grade A developments in major central business districts (CBDs) are expected to keep their asking rates steady.
“With the impending passing of the proposed amendments to the Corporate Recovery and Tax Incentives for Enterprises (CREATE) bill, overall vacancies are bound to be affected in the medium term,” Cushman & Wakefield said.
Due to high vacancy rates, several office developments, especially in fringe locations, are being offered at lower rates, eventually reversing the upward growth trend of the overall average asking rates of Prime and Grade A developments in Metro Manila. — A.R.A. Inosante
