Office space demand in the Philippines is expected to double to 228,000 square meters in 2023 from 110,500 sq. m. last year on the back of the sustained expansion of business process outsourcing companies, a real estate services firm said Friday.
“The country’s office market is [showing] uneven but steady recovery, supported by sustained transaction activity in Metro Manila and provincial locations becoming a mainstay in locators’ portfolios. Developers and occupiers alike have much to gain by exploring both flexible and traditional workspace solutions, especially in the provinces,” said Colliers associate director for office service and tenant representation Kevin Jara.
Colliers reported that office space net take-up reached 110,500 sq. m. in 2022, a huge turn-around from the negative take-up in 2020 and 2021.
It said some 641,100 sq. m. of new office space would add to the existing office inventory this year. This would represent a 14.55-percent decline from 750,300 sq. m. of completed spaces in 2022.
Colliers said the new supply in Metro Manila was reverting to pre-POGO levels, while flexible workspaces would likely play a crucial role in tenants’ post-COVID operations.
Office rent is expected to further drop by 5 percent in 2023 following a 0.6-percent decline in 2022. Colliers expect rents to bottom out in 2023 before recovering in 2024. It said vacancy rate slightly eased to 18.8 percent in the fourth quarter of 2022 amid the lackluster take-up.
Residential spaces in the condominium segment are rebounding, according to Colliers. Expected take-up in 2023 is seen to increase to 3,800 units from 3,000 units in 2022 on stable demand from employees in major business districts.
Condominium rents may increase by 2 percent in 2023, while vacancies are expected to drop 17 percent until yearend, it said.
“Collier is projecting improvement in vacancies across Metro Manila’s secondary market and this should result to rebound in rents and prices. We see continued queues from expatriates, while demand from local employees has been raising rents in major business districts such as Makati, Fort Bonifacio and Ortigas,” said Colliers director for research Joey Bondoc.
Hotel occupancy is expected to pick up in 2023 to 60 percent from 55 percent in 2022, owing to the so-called revenge travel among tourists from China and the US.
New accommodation spaces will open in 2023 with the completion of an additional 4,410 rooms, a record high and up 204.3 percent from 1,449 rooms completed in 2022, Colliers said.
“Aside from the domestic tourism push, we see the influx of more international tourists boosting tourism receipts, hotel rates and occupancies. In our review, recovery should be supported by the modernization of more airports and upgrading of road networks,” Bondoc said.