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Colliers Quarterly | Property Market Report – Office | Q1 2022 | Philippines

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Philippine property market, Metro Manila property market, Office real estate, Office sector

The office market is finally turning a corner as it recorded a positive net take-up in Q1 2022 after seven consecutive quarters of negative absorption. Traditional and BPO firms continue to dominate demand as they take advantage of the rental correction and availability of new office buildings in major business districts.

 

Colliers sees the office market finally turning a corner as it recorded a positive net take-up in Q1 2022 after seven consecutive quarters of negative absorption. Traditional (companies in various sectors, such as legal, engineering and construction, government agencies and flexible workspace operators) and business process outsourcing (BPO) companies continue to dominate demand as they take advantage of the rental correction and availability of new office buildings in major business districts. Companies’ return-to-office mandates should also support office absorption over the next 12 months.

In 2022, we see the completion of 821,900 square meters of new office space, nearly 60% of which will likely to come from the Ortigas Center, Makati Fringe, and the Bay Area. Office rents, meanwhile, dropped by an average of 3.1% QoQ in Q1 2022. We project a slow recovery in lease rates starting in 2023 as we see a pick-up in demand from outsourcing and traditional firms. Vacancy reached 17.3% in Q1 2022 from 15.7% in Q4 2021. Colliers revises its year-end projection of an 18.2% vacancy from 18.9% due to tapered new supply.

Colliers recommends that tenants that are still in a wait-and see mode consider occupying flexible workspaces. Those with long-term occupancy plans should lock in spaces in new and sustainable office buildings and take advantage of rental corrections and other concessions given by landlords. Meanwhile, landlords should proactively capture demand from new start-ups given a more liberalized and competitive business environment.


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Philippine property market, Metro Manila property market, Office real estate, Office sector

Colliers Quarterly | Property Market Report – Office | Q1 2022 | Philippines

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