Office vacancy in Metro Manila is expected to widen to 18.9 percent this year from 15.7 percent in 2021 on muted pre-leasing and completion of new office supplies, Colliers Philippines said Wednesday.
Colliers Philippines said in a property briefing office vacancy would likely peak this year before recovering in 2023.
Colliers Philippines said the “office vacancy is likely to increase further in 2022 due to the delivery of close to 900,000 square meters of new supply and low pre-commitment levels of upcoming buildings.” Colliers Philippines said.
It said that aside from the higher vacancy, office rents in Metro Manila were also expected to decline by 10 percent this year.
“We see a slow recovery starting second half of 2022, supported by sustained office absorption as inquiries are likely to materialize after six to 12 months,” it said.
It said office demand outside Metro Manila such as Cebu, Iloilo and Pampanga would remain healthy.
Colliers Philippines said the return of offshore gaming operators in the country could accelerate the rebound in the office sector.
It said that assuming 100,000 square meters of office space would be leased to Philippine Offshore Gaming Operators this year, office vacancy would be at 18.2 percent, instead of the estimated 18.9 percent.
Data showed that as of end-2021, some 612,000 sq. m. of office space were vacated by POGOs following the crackdown in China and the higher taxes imposed by the government.
POGOs accounted for 5 percent of total office space in 2021, down from 11 percent in 2019.
Colliers Philippines said that in the residential market, developers should consider launching more house-and-lot projects in Pampanga, Bulacan, Tarlac, Cavite, Laguna and Batangas which showed sustained growth in take-up.
“The Philippine economy is bound for rebound in 2022. We see the economic expansion supporting demand in the residential sector, whether in the pre-selling or secondary market,” Colliers Philippines associate director for research Joey Roi Bondoc said.
“While we saw initial headwinds at the start of the year, especially the spread of the Omicron variant, the gradual return of foreign professionals and turnaround in business and consumer confidence should help fuel the take-up of more residential units. We also see rents and prices recovering in the next 12 months. These indicators bode well for the residential market,” he said.