Metro Manila office space vacancy slips

The office space vacancy rate in Metro Manila slipped to 19.9% in the third quarter, from 20.6% in the second quarter, as rates eased in all business districts for the first time since the pandemic, according to real estate services and investment firm CBRE.

“In the past two years, I would say new entrants would be 10-15% of overall demand in the market. Though transactions for the last two quarters have been quite low, we’ve seen more inquiries from our US office than we did at the start of the pandemic,” said Jie C. Espinosa, CBRE Philippines’ country head, at a briefing on Friday.

CBRE data showed all Metro Manila business districts saw easing vacancy rates for the first time since the coronavirus disease 2019 (COVID-19) pandemic started in early 2020.

As of the third quarter, there is around 1.69 million square meters (sq.m.) of available office supply in Metro Manila.

The Bay Area, covering Pasay and Parañaque cities, had the biggest amount of vacant office space at 367,000 sq.m., followed by Makati City with 359,000 sq.m. and Ortigas in Pasig City with 341,000 sq.m.

Quezon City had 263,000 sq.m. in vacant office space, followed by Alabang with 191,000 sq.m. and Fort Bonifacio in Taguig City with 162,000 sq.m.

“Fort Bonifacio vacancy approaching pre-pandemic levels, buoyed by strong demand, with 85% of its transactions done in vacated spaces,” CBRE said.

Office space demand reached 502,000 sq.m. as of the third quarter, surpassing the full-year demand of 455,000 sq.m. seen in 2021.

The information technology and business process management sector has driven the demand for office space, making up for the exodus of Philippine Offshore Gaming Operators (POGOs).

Around 41% of the vacant spaces, mostly in the Bay Area and Makati, were previously occupied by POGOs.

CBRE data showed POGO take-up is still nowhere near the pre-pandemic level of 38% in the last quarter of 2019. Only 3% of the office space demand is from POGOs as of the third quarter this year.

CBRE noted developers are now looking at more stringent requirements in accepting POGO occupiers, such as six months’ worth of deposits and background checks on the company. — B.H.Lacsamana

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The article was originally published in Business World.