CEBU’s office space vacancy rate is forecasted to persist at elevated levels this year, property consultancy firm Colliers Philippines said.
“Despite a strong net take-up, vacancies remain elevated due to new supply which is expected to persist in 2024,” Colliers said in its 2024 annual report.
The property consultancy firm projects vacancy to reach 21.3% from 20% in 2023 due to the expected delivery of 107,900 square meters (sq.m.) of new office space.
This is an improvement from the 27% vacancy rate in 2022.
“Colliers Philippines observed that outside of Metro Manila, Cebu remained the top choice for outsourcing firms and multinational companies,” Colliers said.
It projects net take-up to rise 9.42% to 72,000 sq.m. Cebu recorded the highest provincial office space take-up with 65,800 sq.m. in 2023.
However, these are all lower than the net absorption of 109,200 sq.m. in 2022.
“We expect greater absorption of office space from third-party outsourcing and shared services firms looking to set up and expand their operations,” the report said.
In 2023, Cebu accounted for 54% to 112,900 sq.m. of deals outside Metro Manila, the highest office deals outside the Philippine capital.
This was buoyed by the business process outsourcing firms, covering nearly 75% of total deals.
Concentrix, OfficePartners 360, Avant, TOA Global, and Optum, mostly situated in Cebu IT Park, were attributed to the mentioned deals.
Colliers said it also recorded 60,200 sq.m. of new office space in Cebu due to the completion of Faustina Center in CBP Fringe, Johndorf Tower in Cebu Business Park, and Skyrise 3B in Cebu IT Park.
The developments in the province’s pipeline are Filinvest Cyberzone Tower 3 in IT Park, Astra Corporate Center, Excelsior Corporate Tower in Banawa Cebu, Filinvest Cyberzone Tower 3, Grand Tower Cebu Condo Office, Il Corso, Mahi Center, Patria de Cebu, and Northwing Tower 1.
Colliers sees a marginal rise in rent and expects it to be “flattish” due to the completion of new offices built before the pandemic but only launched now.
The average rent in Metro Cebu rose 0.4% to P651 per sq.m. in 2023.
“Colliers believes that shared services, healthcare companies, and other multinational firms are likely to occupy more office spaces in this location,” it said.
The firm said despite the positive performance of the province, rationalization of office real estate is still happening.
Colliers still expects a tenant-leaning market for the province, and tenants should seize the opportunity to access better quality office buildings, a skilled labor pool, and improved infrastructure.
Recently, the Philippine Statistics Authority reported Cebu as the sixth richest city in the country outside Metro Manila in 2022, with a per capita gross domestic product of P293,426. — Aubrey Rose A. Inosante
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The article was originally published in Business World.
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