Office rental rates in Makati averaged P1,140.0 per square meter (sqm) each month in the last quarter of 2018, the highest in Metro Manila submarkets, global real estate services firm KMC Savills said.
Vacancy rate for the Makati central business district is solid at 3 percent, while net absorption is slower at 19,500 sqm.
The property firm is projecting even higher rental rates as contract expirations are expected to drive higher bids.
“We expect mixed results in 2019 as we see the different submarkets undergo through varied conditions affecting vacancies, absorption, and rental growth,” KMC research manager Fred Rara said.
“Overall Metro Manila rental rates might accelerate, specifically for the Makati, Alabang and Ortigas Center submarkets due to rising demand despite the latter’s pipeline of 206,000 square meter GLA (gross leasable area) completions for next year.”
Overall, the average office rent in Metro Manila went up to 5 percent year on year during the fourth quarter.
Net take-up for the office market in Metro Manila surged to 701,100 square meters during the last quarter of 2018, KMC said.
The firm attributed the growth to the expanding local outsourcing and offshoring industry.
About 746,000 sqm of gross leasable area were introduced during the same year.
In particular, growth in the districts of Alabang and Bay Area was boosted by the Philippine Offshore Gaming and Outsourcing sector, KMC said, with vacancies in Alabang tighter at only 1.4 percent of the stock.
Vacancy rate in the Bay Area upped by 0.6 percent, but net take-up exceeded the entrance of new supply at 163,500 sqm.
Annually, rental rates in the Alabang and Ortigas districts went up by 5.30 percent and 10.9 percent, respectively. The rise in rental rates in Ortigas is the highest for the quarter, KMC added.
As for the Bonifacio Global City, KMC pointed at additional supply from the Asian Century Center paired with slower net-take up as factors more unoccupied spaces at 5.0 percent.
Rents grew at a healthy pace of 5 percent annually, or to P972.8 per sqm per month.
Meanwhile, vacancies dropped to 2 percent in Ortigas as net absorption stood at 51,700 sqm, signaling improved market conditions for the city, KMC said.
On the other hand, the completion of the Cyberpark Tower Two and the Centris Cyberpod Five led to a 16.4 percent vacancy rate in Quezon City.