Office rental rates in Metro Manila remain stable, but overall saw a slight increase in the first quarter of 2024, according to real estate services firm KMC Savills.
In their recently released report, the firm recorded P861.3 in rental rates this year from P857.6 in the fourth quarter of 2023.
Particularly, office rental rates in the Bonifacio Global City (BGC), Ortigas Center, and Bay Area saw marginal increases, while rates in the Makati and Alabang Central Business Districts (CBD), and Quezon City saw slight decreases.
KMC Savills said that stability is expected in rental prices throughout the year, “albeit with potential variations in certain submarkets where competition remains tight due to high vacancy rates.”
It predicted that vacancy rates will go up in the short term since new available office spaces are seen to open in the middle of the year.
However, in the medium term, vacancies may be reduced to “an estimated year-end rate of 20.9 percent despite the addition of 528,000 square meters (sqm) of office space throughout the year” due to the spaces that sectors like the information technology and business process management (IT-BPM) industry are forecast to occupy.
Overall, the IT-BPM sector is lauded as the primary driver of the office market in the metropolis, followed by traditional offices and shipping or government bodies.
Notably, the total office space provided by companies that have flexible workspace arrangements in Metro Manila reached around 250,000 sqm in the first quarter.
Noteworthy transactions in the office market totaled 182,000 sqm during this period, with the Bay Area, BGC, and C5 Corridor leading the transaction volume.
“These areas enjoy strategic proximity and accessibility to residential hubs outside Metro Manila, such as Cavite for Bay Area and Rizal for C5 Corridor, facilitating talent acquisition for tenants,” noted the firm.