ROBUST DEMAND. Leechiu Property Consultants director for commercial leasing Mikko Barranda says Thursday (Oct. 12, 2023) the Metro Manila office market can hit the 1 million square meter demand by the end of 2023. The Philippines is also one of the "very few markets" in the world that maintains a positive net demand, he said. (PNA photo by Kris Crismundo)
MANILA – Real estate advisory firm Leechiu Property Consultants (LPC) said the Metro Manila office market is expected to hit the 1 million square meters (sqm) mark by the end of 2023.
In a press briefing in Makati City Thursday, LPC director for commercial leasing Mikko Barranda said demand for office space in the National Capital Region (NCR) from January to September 2023 already rose 17 percent to 809,000 sqm from around 683,760 sqm during the same period last year.
Barranda said the office space demand is seen to return to the pre-pandemic level of 1.3 million sqm in 2018 within the next two years.
For the full year of 2022, the demand reached 989,000 sqm.
“It will be the ITBPO (information technology and business process outsourcing) sector that will drive up demand,” he said.
The optimism came from ITBPO’s workforce projection of hiring another 135,000 personnel this year, Barranda said, adding that despite the hybrid work arrangement, the robust hiring activities will still require new office spaces.
He said the Metro Manila office market maintains a positive net demand for office space leasing.
“The Philippine office sector today is one of the very few markets in the world that is still going positive for live requirements,” he added.
In the first half of the year alone, the demand in Metro Manila posted a net positive of 240,000 sqm, along with other financial districts in the region such as Tokyo (+280,000 sqm), New Delhi (+308,000 sqm), and Bengaluru (+350,000 sqm).
Other top global financial districts had a net decline in demand: Los Angeles (-264,000 sqm), San Francisco (-260,000 sqm), Shanghai (-180,000 sqm), Hong Kong (-49,000 sqm), New York (-48,000 sqm) and Sydney (-40,000 sqm).
Office vacancy remains in double-digit level at 19 percent as of the third quarter of 2023 for the total current supply of 18.1 million sqm.
Barranda said that with the declining supply starting next year, the vacancy rate for office space will go back to single-digit between 2026 and 2027.
Meanwhile, LPC director for investment sales Tam Angel said the entire property sector—office, residential, industrial, tourism and retail— will further benefit and improve with the proper management of inflation and lower interest rates.
“Those two things will provide a very good base for internal driving factors of the real sector,” Angel said.
He added the market also expects that interest rates will start to decline next year. (PNA)
