Office occupancy in NCR reaches 80%

Office occupancy rate in Metro Manila reached 80 percent from 75 percent in the fourth quarter of 2024, according to property advisor Santos Knight Frank.

BGC and Makati continue have highest occupancy rates in Metro Manila at 89 percent and 80 percent, respectively.

“The office market has continued its road to recovery post-COVID. The increased demand from conventional office tenants and flexible office operators has significantly contributed to the upswing in commercial leasing requirements. We are expecting this momentum to continue in 2024,” said Santos Knight Frank chairman and CEO Rick Santos.

In the luxury residential sector, Manila has also led the price growth at 21.2 percent - the fastest across the world according to Knight Frank’s Prime Global Cities Index.

Santos not the strong investor confidence in the Philippines has buoyed the real estate market despite rising interest rates.

“The luxury residential space is one of several sectors where we're seeing encouraging market activity. Pent-up demand for prime properties, the return of the residential leasing market, and the tight supply of developments have contributed to significant price appreciation especially in central business districts,” he said.

The improving economy has also boosted growth of key sectors as GDP grew by 5.9 percent in the third quarter of 2023. The Asian Development Bank and the World Bank estimate the Philippines’ GDP to grow by 6 percent and 5.6 percent, respectively.

Post-pandemic, the choice between in-office work and a flexible remote model has been shaping the office market, Santos Knight Frank said. There are signs that companies now are making long-term plans about their workplace setups, it said.

Office occupiers continue to prefer quality buildings that provide good value. Prime buildings’ vacancy rate at 17 percent, continued to surpass average office buildings’ vacancy of 20 percent in the third quarter, even when prime lease rates averaged at P1,244/sqm per month compared to the market’s 980/sqm per month.

Makati City emerged with the highest lease rate in the metropolis, with weighted average lease rate of P1,143/sqm per month. Fort Bonifacio ranked second at P1,098/sqm per month, followed by the Bay Area at P902/sqm per month.

Since the pandemic, buyers have shown an increasing appetite for second homes. About 41 percent of respondents in a survey by Santos Knight Frank in 2021 said they were eyeing to buy a second home, a higher proportion than Asia Pacific.

This trend is likely to continue in 2024, Santos Knight Frank said, with local buyers acquiring leisure properties in Metro Luzon either for their end use or investment, it said.

In 2023, there has been a significant emergence of increased customer spending termed as "revenge spending".

Metro Manila’s retail stock sits at 5.1 million sqm. Taguig recorded the best-performing occupancy rate at 93 percent in the third quarter. Meanwhile, the Bay Area recorded the lowest at 85 percent caused by the addition of new 78,00 sqm of leasable area.