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Metro Manila Office Market Sees Highest Recorded Take-Up in Third Quarter

2015-12-18 11:00 3023

MANILA, Philippines, Dec. 18, 2015 /PRNewswire/ -- Premium and Grade A office space take-up in Metro Manila's main business districts (CBDs) continued its acceleration during the third quarter of 2015 despite high amount of new supply due to strong pre-leasing activity, according to the most recent Office Briefing published by Savills international associate KMC MAG Group.

The amount of new supply delivered this quarter is at 232,961 and take-up reached 231,412 sq m. The latest report also said that it is the highest recorded take-up of all-time in the city.

"Most of the new spaces delivered have been pre-leased prior to completion that is why take-up is very high," said Michael McCullough, KMC MAG Managing Director.

Upcoming supply is estimated to reach around 1.8-million sq m in 2018. However, despite the significant amount of supply, KMC MAG says that overall office rental and vacancy rates are expected to remain stable given the strong pre-leasing activity.

"We continue to see interest from both local and foreign firms across all CBDs, although most of the interest is currently in BGC only because it is where most of the new supply will come from," said McCullough.

"The profiles of companies who have pre-leased or are currently pre-leasing space vary across all CBDs. Ortigas, Bay Area, and Quezon City are very attractive to new IT-BPO firms who are just starting to outsource services and processes to the Philippines because of the lower rates."

"Makati remains the CBD of choice for large-scale enterprises who want to upgrade their headquarters and move to a better location, however many firms are forced to look towards BGC due to the lack of available and suitable space."

Rental rates continue to soar as vacancy remains low

Thanks to the sustained IT-BPO industry demand and the relatively low level of new supply in these areas, Bay Area and Quezon City are projected to have the lowest vacancy rates and strongest rental rate growth among the business districts within the next 12 months, according to the briefing.

This quarter, Bay Area recorded a solid 17.0% YoY rental rate growth, with Grade A rentals averaging from Php 673.4 to Php 700.0 per sq m/month and an ultra-low 1.3% vacancy rate.

Meanwhile, Quezon City (QC) posted an 8.5% YoY growth, with average Grade A office rates ranging from Php 700.4 to Php 750.0 per sq m/month. Located in the northernmost part of Metro Manila, QC holds an impressive below 1.0% vacancy rate with only 0.2% of its total stock unoccupied, making it the best performing CBD in the country this quarter.

Makati, on the other hand, remains as the most premium CBD, posting a 4.3% YoY growth with the highest asking net Grade A rental rates averaging Php 979.1 to Php 1400.0 per sq m/ month. In spite of this, Makati's vacancy rate remains low at 3.0%, and is likely to become lower once Tower 6789 becomes fully occupied.

BGC comes in next, with a rental growth of 3.7% YoY and an average asking rental rate of Php 860.4 to Php 1,100 per sq m/month. The district's vacancy rate slightly increased to 2.6%; however, it should be noted that this is because it absorbed most of the new supply, allowing it to post its highest recorded quarterly take-up since Q1/2014 of 49,639 sq m.

Ortigas' growth remains strong at 6.8% YoY, bringing average rental rate up to Php 624.6 per sq m/ month, with an upper rate of Php 750.0 per sq m/month. Ortigas' strong rental growth is expected to continue, given its current 2.5% vacancy rate and lack of new supply until the end of 2016.

Alabang is the only office market with a sluggish growth of only 0.6% YoY and a high vacancy rate of 16.0%. This brought down average asking rental rate of the CBD to Php 605.3 per sqm/ month in Q3/2015 from Php 601.8 per sq m/month in Q3/2014.

Read the full report here.

About KMC MAG Group

KMC MAG Group, Inc. is an award-winning real estate services firm based in the Philippines. The company works with over 100 employees that are directly involved in transactions for office and retail space, industrial locations, as well as residential properties. KMC MAG Group is also an International Associate of Savills, a leading global real estate services provider listed on the London Stock Exchange. For more information on the company, please visit kmcmaggroup.com.

About Savills

Savills is a leading global real estate service provider listed on the London Stock Exchange. The company, established in 1855, has a rich heritage with unrivalled growth. It is a company that leads rather than follows and now has over 500 offices and associates throughout the Americas, Europe, Asia Pacific, Africa and the Middle East. Savills' unique combination of sector knowledge and entrepreneurial flair gives clients access to real estate expertise of the highest calibre. Savills is synonymous with a high-quality service offering and a premium brand that takes a long-term view on real estate and invests in strategic relationships.

For more information about this release, please contact:

Yves Luethi
KMC MAG Group
Tel: (632) 403 5519 Loc. 126
Email: marketing@kmcmaggroup.com

Source: KMC MAG Group, Inc.
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