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Metro Manila’s office space net take-up surged 125 percent in the first half of 2024, eclipsing the entire 2023 total, driven by return-to-office mandates and expansion, global real estate firm Santos Knight Frank said in a report by BusinessWorld.
The sector absorbed 281,000 square meters (sq m) of office space in the first six months, compared with 125,000 sq m for all of last year.
“Return-to-office mandates and office expansions, supported by offshoring operations, have led to a doubling of demand in the office market,” said Rick Santos, chairman and CEO of Santos Knight Frank.
Information technology, business process management, and government agencies led office transactions during the period.
Average rental rates reached P1,022 per square meter, with a vacancy rate of 18.9% and a total supply of 8.5 million sq m in the first half, said Morgan McGilvray, senior director for Occupier Services & Commercial Agency.
Makati City had the highest asking rent at P1,256 per square meter, with a 20.7% vacancy rate and 1.5 million sq m of supply. Taguig followed with a P1,250 per square meter asking rent, a 14.5% vacancy rate, and 2.3 million sq m of supply.
“Makati still has the biggest section of prime-grade buildings, and we’re also seeing some of the higher rents for new buildings in Makati that are generally close to EDSA and along Ayala Avenue,” McGilvray said.
Other key business districts and their figures for the first half were: Alabang (P788 average rent, 23.8% vacancy, 500,000 sq m supply); Quezon City (P823, 27.8%, 1.4 million sq m); Ortigas (P820, 22%, 1.6 million sq m); and the Bay Area (P972, 23.2%, 1.2 million sq m).
“The Metro Manila office market remains tenant-favorable, with rents exhibiting marginal decline,” McGilvray said.
About 127,000 sq m of new office space was completed in the first half, bringing the total supply to 8.5 million sq m. Another 299,000 sq m is expected to be finished in the second half, with an additional 360,000 sq m from 2025 to 2027.
Santos said the Philippines remains a competitive offshoring hub in the Asia-Pacific due to its young workforce, affordable costs, and ample office space. Knight Frank ranked the Philippines as the most well-rounded offshoring hub in the region, citing its workforce demographics, business costs, skills, growth dynamics, and commercial real estate value.
McGilvray said Metro Manila was the third most affordable location in Asia Pacific, with the average prime office occupancy cost at $27.90 per square foot per year.
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