OFFICE PROPERTY MARKET

SUPPLY
An estimate of 156,100 square meters of office space was added to the total stock owing to
the completion of eight (8) buildings, bringing in the aggregate supply added for 2019 to
336,700 square meters of office space. Development completions in 2Q19 are spread in
several locations across the districts of Metro Manila within the Cities of Makati,
Muntinlupa, Paranaque, Pasay, Quezon, and Taguig. The biggest of this development is
MWM Terminal Inc.’s PITX Tower 4 in Paranaque City, which spans 19,200 square meters.
This is followed by Double Dragon Center West with 17,600 square meters; 100 West
Building in Filinvest Makati with 14,300 square meters and SM City Fairview Tower 1 with
12,600 square meters.
As of 2Q19, the supply of office spaces from Grade B to A developments approximately
totals to 8.1 million square meters of office space with the majority located in Taguig City
followed by Makati City backed by the presence of established CBDs – Makati and Bonifacio
Global City (BGC). The high demand and concentration of office developments have spilled
to its fringe areas with the presence of Mckinley Hill and Mckinley West in Taguig City and
office developments rising along Chino Roces Avenue and other townships.
DEMAND
Metro Manila maintained a manageable vacancy level at 6% amid continuous additional
office spaces from development completions. Taguig City holds the majority of the office
spaces untenanted as the majority of the recent development completions are in BGC.
Coming in second is Makati City, followed by Quezon City.
Offshoring and Outsourcing (O&O) remain as the major demand driver, taking-up
approximately 128,100 square meters of office space in 2Q19. For the whole of 1H19,
around 181,000 square meters of office space was absorbed by O&O firms. However, there
has been a slow q-o-q take-up of office spaces from O&O firms in Metro Manila as they have
expanded more in the provinces, owing to the limited PEZA approvals for IT centers
especially in Metro Manila.
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In 2Q19, only two buildings were granted PEZA accreditation with one located in Taguig
City and the other in Iloilo City. Moreover, the government’s Administrative Order No. 18
for 2019 imposes prohibition of reviewing and granting PEZA applications for properties
located in Metro Manila to allow the creation of more special economic zones in the
provinces.
Online Gaming remains the second top office space occupier in the whole of 1H19 leasing a
total of 160,000 square meters of office space in Metro Manila with around 119,200 square
meters of office space transacted in 2Q19. For the said quarter, a POGO leased a whole
building in Quezon City with a Gross Leasable Area (GLA) of 10,400 square meters and also
leased significant amount of office spaces in two buildings within Paranaque City. As of
June 2019, 56 POGOs have been registered with PAGCOR.
Pharmaceutical companies came as a surprise as a major demand driver to leased office
spaces in 1H19, taking up an estimate of 45,100 square meters mainly due to their
expansions within Metro Manila. Fourth top office space occupier for 1H19 are flexible
workspace operators leasing 14,400 square meters of office space in Metro Manila.
Major foreign and local operators remain to be aggressive in their expansion plans and are
seeking to increase footprint both in CBD areas and secondary business hubs. In 2Q19,
WeWork opened its second facility in the country at RCBC Plaza in Makati CBD.
RENTS
Makati City remains to have the highest quoted rent mainly due to the presence of Prime
Office buildings within Makati CBD. Limited available office supply in Makati CBD, robust
demand and presence of prime office buildings pushed landlords to command higher rents.
Next would be Taguig City due to robust space demand in BGC with up-to-date building
facilities. On the other hand, buoyant occupancy from online gaming in the Bay Area
pushed rental rates further.
Meanwhile, asking rents of developments to complete from 2H19-2022E are close to the
range of rents of existing developments with Taguig City leading the higher end of the
spectrum due to more construction of Grade A developments in BGC. Buildings that are
registered with USA’s LEED (Leadership in Energy and Environmental Design) or the
Philippine Green Building Council’s BERDE certifications have been influencing the
increase in the value of rents due to quality technology and equipment used for buildings to
be environmentally sustainable in the long run.
RESIDENTIAL CONDOMINIUM PROPERTY MARKET
SUPPLY
More than 2,000 units are completed in 2Q19, mostly coming from Makati City and Taguig
City. The latter half of the year is expected to deliver around 35,500 units more, recording a
peak, should there be no construction delays. Makati City and Quezon City house majority
of both existing and future condominium supply. Growth is noticeable in Pasay City in the
next three years due to the uptick of investments in Bay City. SM Prime Holdings, Inc. holds
the majority of both existing and future supply, on the back of being the lead contributor in
various cities, particularly Pasay City where more than 90% of the pipeline belongs to the
developer.

Read more: https://business.inquirer.net/275259/jll-reveals-philippine-property-market-

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