Makati lost the top position as Metro Manila’s top office space market to Bonifacio Global City, which currently has over 1.134 million square meters of total office space stock
Metro Manila had an impressive first half of 2016, according to a recent report from local real estate market expert KMC Savills. In the study released by the consultancy firm, about 291,000 square meters of office space were taken up in the first two quarters of the year. KMC Savills also noted a slight decrease in vacancy rates from 3.7 percent in the first quarter of the year to 2.9 percent in the second quarter, which is possibly due to the decrease in available office space.
But while KMC Savills believes that these rates will increase upon the completion of 259,000 square meters of space at the end of 2016, it is still evident that some of the country’s central business districts (CBDs) appear to be in a race to become the largest office space provider in Metro Manila. Below are the top five CBDs in the Philippine capital in terms of total current office space stock.
1. Bonifacio Global City, Taguig
Bonifacio Global City (BGC) currently holds the top position with a stock of 1,134,313 square meters of office space, boosted in part by three office towers delivered at the second quarter of 2016—namely, Metrobank Center, Bonifacio Stopover Corporate Center, and Uptown Place Tower 3. Although these three newly completed towers added an estimated 124,000 square meters to BGC’s stock, the business district still managed to keep vacancy (2.7 percent) and rental (0.1 percent increase quarter-on-quarter) rates manageable. By the end of 2018, BGC expects the completion of around 843,000 square meters of additional office space, which could increase vacancy rates.
2. Makati CBD
Not too far behind BGC is Makati’s office space stock of 1,080,863 square meters. Due to limited vacant spaces (2.1 percent), average rental rates have increased from Php1,000/month in Q1 2016 to Php1,004.7/month in Q2 of the same year. With Insular Life Makati Building the only building expected to increase Makati’s inventory in the next 12 months, as well as the completion of City Gate Towers in 2018, the city’s stock is expected to increase by around 75,000 square meters.
3. Ortigas Center, Mandaluyong and Pasig cities
With very little in the way of new real estate developments, Ortigas Center presently has a total of 635,199 square meters of office space. Rent is now at Php639.00 per square meter/month. It is also due to the limited supply that vacancy rates in Ortigas Center are at a low 1.2 percent. On the other hand, the following year will see the completion of the IBP Tower and the 30th Corporate Center, which will add a combined 67,400 square meters to Ortigas Center’s office space.
4. Quezon City
Landing the fourth spot is Quezon City with a current office stock of 463,183 square meters. At present, monthly rental rates range from Php714.50 to Php750.00, a 3.8 percent rental growth from 2015 and Quezon City’s lowest rent increase in years. Overall vacancy rate in the city improved from 10.8 percent in Q1 2016 to 9.1 percent in Q2 2016, and there are currently no office spaces scheduled to be completed in 2016.
5. Bay Area, Pasay City
Despite 326,737 square meters having been completed by the second quarter of 2016, Bay Area enjoys fast take-up of office space, keeping vacancy of leasable space the lowest among all submarkets at 0.4 percent. The offshoring and outsourcing industries are seen to be its biggest tenants, paying Php695.60 per square meter every month in Q2 2016 compared to the first quarter’s Php676.70. Almost 359,000 square meters of additional office space is expected to be completed in the Bay Area in the next two years.
Almost making it to the top five and hot on the heels of Bay Area is Alabang, Muntinlupa, with an office space stock of 311,407 square meters. Three submarkets—McKinley, the C5 Corridor, and the Makati Fringe area—are also expected to strengthen their position as office providers in the metro over the years.
To read KMC Savills’ full report, click here.
Main photo via Shutterstock