Philippines office space demand bullish, up 18% in 2012 of 43,000 hectares and still rising till year end of 2012
43K hectares in lease spaces
The property market will continue to grow this year with record leased space of 430,000 square meters equivalent to 43 hectares.
Consultancy firm Lang Jones Lang LaSalle Leechiu (JLLL) said that office space demand continue to grow.
Sheila Lobien, JLLL director for project leasing, noted that between January and November, office space demand hit 425,000 sqm., 18 per cent more than the annual average demand of 360,000 sqm. recorded in 2011.
The demand continues to be driven by players in the business process outsourcing business,al though non-BPO multinational and local companies are increasingly taking up other demands, comprising nearly 25 percent of current demand in Metro Manila at 100,000 sqm.
"Even before preferred office buildings are completed, companies are committing to take up space, indicating strong optimism and heightened business activity projected by the leading real estate consultancy for 2013. Pre-commitments are backed up by signed lease agreements between parties, and advanced rent and security deposits are paid," said JLLI.
Lobien said the office space market continue to be a sellers' market with pre-commitments more than doubled in January to November 2012 as compared to the same period in the year before.
The average base rent in Grade A office spaces in Bonifacio Global City and the Makati Central Business District for one went up 15-20 percent since 2011.
"In 11 months of 2011, we recorded pre-commitments of 68,358 sqm. In 2012, the figure over the same period shot up to 175,922 sqm.," said Lobien.
JLLL studies also noted that a number of companies pre-committed to office space that would be completed as far forward as 2014.
Up until 2015, office supply set to come online is estimated to hit 7.9 million with the current supply already at 6.2 million sq.m. Vacancy rate across Metro Manila business districts meanwhile stands at 5 percent, JLLL said.
The consultancy firm also said that should the Philippines post a "stable fiscal position and good credit standing by 2013/2014," it expects "other demand drives to create an additional demand of roughly 100,000-200,--- sq.m. of office space.
Phillip Anonuevo, associate director for Markets, said companies like Coca Cola and Aboitiz Group are bracing for expansion and moving to new corporate space in Bonifacio Global City.
Anonuevo noted that buildings in this highly preferred business district like Net Lima and NAC were fully leased out even before building completion.
Anonuevo meanwhile said the massive entertainment district development in the Bay Area has provided impetus for tourism development.
He noted that in May, JLLL tracked 10,536 hotel rooms in the pipeline from 2011 to 2016. An additional 5,000 hotel rooms has since been added to the figure in just six months.
"Investment in the hotels and hospitality real estate asset class is experiencing record growth. In addition, commercial properties such as Aseana One in the same district have become an attractive destination for firms seeking to do business in the proximity of the entertainment district," he said. Anonuevo said prospects for the office space and retail space remains good "at least going to be for the next three years." (http://is.gd/oHnL5F)
Malaya Business Insight
