Metro Manila office space stock expands 3.2% in Q2

Metro Manila’s office space market remained strong, expanding 3.2 percent year-on -year in the second quarter of 2024 amid a surge in new supply, real estate services firm KMC Savills said in a report by Manila Standard.

Total office space inventory in the National Capital Region reached 9.4 million square meters in the second quarter, up from 9.1 million square meters a year earlier, the report said.

The Bay Area emerged as a key growth driver and is on track to surpass Makati as the second-largest hub for Grade A buildings.

IT-BPM firms remained the leading source of demand, accounting for 46% of the market, followed by government offices in the Bay Area, where office supply reached 1.286 million square meters as of the second quarter.

BGC and the Bay Area continued to be hot spots for real estate transactions. BGC attracted IT-BPM companies because of operational efficiency and quality considerations, while the Bay Area saw a rebound in leasing activity driven by the influx of government agencies.

Despite increased supply, BGC’s vacancy rate fell 9% in the second quarter, while the Bay Area’s vacancy rate dropped to 21.9% from 27.9% in the first quarter due to strong demand and its strategic location.

Rental rates across Metro Manila were stable, with a slight 0.1% dip from the first quarter. Ortigas Center’s rates declined because of older buildings, while Quezon City’s rates surpassed Ortigas Center’s.