THE office market in Metro Manila is on track for a robust recovery starting in the fourth quarter of 2022, according to real estate consultancy firm Lobien Realty Group (LRG).
In a statement, LRG said data from the first six months of 2022 showed that the office vacancy rate in Metro Manila is now at 19%, but is expected to improve as office demand picks up with increased economic activity.
“Moreover, demand for office space in Metro Manila is seen to improve and will be adequately met by the office space supply in the pipeline which is currently pegged at 1.7 million square meters (sq.m.),” it said.
According to LRG, the Makati business district has a pipeline of 307,000 sq.m. in office spaces that is expected to be completed by 2028. The business district in Taguig has 250,000 sq.m. of office space in the pipeline, while Pasig has pending office space of 139,0000 sq.m.
According to LRG, average office space rent in Metro Manila’s business districts remained unchanged at P1,110 per sq.m.
“Opportunity is seen for office space tenants and locators due to the 19% vacancy rates, ample supply of office space pipeline in all office space grades and the possible weakening of rental rates for landlords to shed the available office supply in the market,” LRG said.
The property consultancy firm said it is “very optimistic” on the recovery of the market.
“The back-to-office directive for those BPOs operating in PEZA (Philippine Economic Zone Authority) areas will increase demand by approximately 400,000 sqm over the next six months,” it said.
The return of mobility will also allow more companies to operate at pre-pandemic levels, which is expected to boost jobs and demand for office spaces, LRG said.
Companies are also likely to secure larger office spaces to ensure social distancing amid the pandemic, it added.
“Although hybrid office arrangements are expected to be instituted by several companies, this is not expected to significantly affect the office space market due to the current telecommunications infrastructure and the preference of local businesses for physical presence of employees in the offices,” LRG said.
“Finally, with the new administration, clearer regulatory and taxation guidelines and the easing of mobility restrictions due to high vaccination rates and non-recurrence of COVID-19 (coronavirus disease 2019) surges, online gaming locators may return to the Philippines which is expected to significantly increase office space demand,” it added.