Going green takes on rosier hue
Metro Manila’s office market is a far cry from what it was just three years ago. Before the COVID-19 pandemic, many pundits had described the market as landlord-driven exemplified by tight supply and a large pool of occupiers willing to fork over a premium for high-quality office space, especially in established business districts such as the Makati CBD and Bonifacio Global City.
Colliers’ Q4 2019 property market report showed that vacancy in Metro Manila dropped even further to 4.3% from 5.0% posted a quarter earlier. Office space absorption was also particularly strong in Quezon City, the Bay Area, Alabang, and areas in the southern part of Metro Manila, where buildings completed in Q4 2019 were fully leased.
Altered landscape
COVID-19 pandemic significantly altered Metro Manila’s office landscape. With many companies shuttering and the flight of POGO players, a good number of commercial buildings suddenly found themselves losing tenants.
Bustling business districts are now shells of their former selves, empty and practically devoid of activities. Companies nowadays are finding ways to ask their workers to return to the office, while many others are considering implementing permanent flexible-work setup.
Office landlords are now finding themselves with a dilemma: how to market their products to a more discerning pool of prospective tenants.
Light at the end of the tunnel
But Colliers’ third quarter 2021 data shows that although vacancy continues to rise, it is now at a slower pace. While it retains its vacancy forecast of 15.6% for 2021 as pre-commitment among upcoming buildings remains muted, outsourcing and traditional corporate occupiers (companies in various sectors, such as legal, engineering and construction, government agencies, and flexible workspace operators) offer an opportunity and will continue to drive office demand in Metro Manila, according to Joey Roi Bondoc, Colliers associate director and head of research.
“Over the next 12 months, the improvement in vaccination rates, relaxation of mobility restrictions, and rise in business confidence should buoy office space absorption,” Bondoc opined. “The availability of options in prime locations and attractive rents should enable occupiers to move from non-core to core locations.”
These options include more green and sustainable office buildings.
Rise of green buildings
Landlords must now look for creative ways to bag that next big lease transaction, one of which is to get green building certification for their properties.
Aside from affording them the appropriate credentials to satisfy their ESG (Environmental, Social, and Governance) standards, many occupiers attribute the growing importance of green and sustainable buildings to staff productivity and health. According to a survey conducted by the U.S. Green Building Council (USGBC), employees who work in LEED-certified buildings are happier, healthier, and more productive than employees in conventional, non-LEED buildings. In this same survey, workers were found to favor companies that are value-oriented, take stances on important issues like sustainability, and do their part for making a positive difference in the world.
Lower maintenance costs
Another study conducted by the USGBC shows that “LEED buildings have reported almost 20 percent lower maintenance costs than typical commercial buildings, while green building retrofits typically decrease operation costs by almost 10 percent in just one year.”
While green buildings in the past meant higher premiums because of the unavailability of technology and a small pool of green construction professionals, things have gradually improved over the last decade. Green technology vendors are multiplying fast, driving fair competition and pricing transparency.
It also helps that many governments are taking a proactive stance in fostering a business environment that puts sustainability high on its agenda. The Philippine Green Building Code aims to reduce greenhouse gas emissions by boosting energy efficiency in building design, construction, and operation. It sets the minimum green standard related to energy efficiency, water and wastewater management, solid waste management, site sustainability, and indoor environmental quality.
The availability of more green certification systems means that there is at least one standard available for any building developer.
The most commonly used in the Philippines are Leadership in Energy and Environmental Design (LEED) of USGBC, which awards four levels of certification: certified, silver, gold, and platinum; WELL, which, like LEED, awards silver, gold, or platinum status, but focuses more the impact buildings can have on humans’ health and well-being; Excellence in Design for Greater Efficiencies (EDGE), which aims to empower emerging markets to scale up resource-efficient buildings; and local initiative Building for Ecologically Responsive Design Excellence (BERDE), conceptualized by the Philippine Green Building Council. The latter certifies that a building is in compliance with local environmental laws and is in line with the programs of the national and local governments.
What the future holds
One of the upcoming commercial buildings to exemplify the commitment to green and sustainable development is the Makati Commerce Tower. LEED Gold-certified (aspiring for Platinum), this next-generation Grade A office tower along Sen. Gil Puyat Avenue just recently held its topping-off ceremony.
Bondoc noted that more companies in the Philippines are now looking for sustainable and healthy work environments that will provide confidence for their employees to return to workplaces, an important consideration in a post-COVID-19 world.
“As we welcome workers back to the office after the pandemic, we might as well do so on the promise that their health and well-being will be promoted, if not actively protected,” he pointed out. “One way to do that is to house them in sustainable and green buildings.