By BERNIE CAHILES-MAGKILAT
Office space and hotel stock in Clark are booming with the rise of Grade A buildings as more companies are expanding operations in the bustling former US military airfield, 90 kilometers north of Manila.
In a Clark office and hotel market overview, Philippine headquartered full-serve real estate services firm KMC noted that building construction in Clark has moved up into grade A from the current grade B buildings.
KMC is an affiliate of Savills, a leading global real estate service provider listed on the London Stock Exchange. This provides KMC and its clients access to a global network of over 700 offices and 30,000 real estate experts throughout the Americas, Europe, Asia Pacific, Africa, and the Middle East.
According to the report, Clark’s office stock from 2011 to 2016 mainly consisted of Grade B buildings.
However, three Grade A buildings have been added to Clark’s office stock since 2017 which now consists 20 percent of total stock.
In the next three years, KMC anticipates 18 Grade A buildings to be completed in the Clark Freeport Zone. These will add as much as 336,000 sq m of gross leasable area (GLA).
Despite the large incoming new supply, we believe the quality of the new office buildings will attract new occupiers in Clark. Currently, developers in Clark are expanding their office portfolio due to the expansion of their current tenants.
KMC also estimates vacancy rates will be kept in check due to the expected demand.
Its estimate assumed that as much as 287,000 square meters of GLA should be absorbed in 2020, with the bulk of the take-up from the POGO sector.
Overall, office market conditions in Clark should remain healthy despite the massive incoming supply as this will be supported by the increasing demand from the BPO and POGO sectors.
On the hospitality market,
KMC reported that two new hotels have opened in 2019, namely Marriott Clark and The Mansion in The Villages, which added 288 keys.
When an earthquake occurred in April this year, it significantly affected Xenia Hotel and Hotel Stotsenberg. Renovations on both hotels are currently underway. Quest Hotel also closed about 128 rooms due to the incident. All of these hotels are expected to be fully operational by 2020.
This is amid a rapidly growing hotel market in Clark with additional 1,160 keys from Hilton Hotel, Hyatt Regency Resort, Widus Hotel and Casino Extension, and Park Inn Radisson Extension are expected to enter the market from 2020 to 2022.
The expanding hotel portfolio in Clark is expected to increase awareness of the city as a viable leisure and corporate destination. The wide array of casinos and golf courses in Clark will continue to draw foreign tourists mostly from China and South Korea.
Moreover, the government’s objective is to transform Clark as one of the country’s leading MICE destinations alongside its efforts to improve infrastructure capacity (e.g. expansion of Clark International Airport), that are expected to sustain momentum for hotel demand.