Office vacancy expected to remain high

Office vacancy rates are expected to remain high due to the total ban on Philippine Offshore Gaming Operators (POGOs) and the implementation of the CREATE MORE Bill, which supports flexible work arrangements and will likely result in more vacant spaces, according to the third-quarter MarketBeat report by Cushman & Wakefield Research.

- Marianne Go

Cushman & Wakefield (CWK), a leading global commercial real estate services firm, reported that at the end of the third quarter this year, overall vacancy rates for prime and grade 'A' office developments in Metro Manila rose by 280 basis points (bps) quarter-on-quarter (q-o-q) and by 136 bps compared to the previous year. The average vacancy rate reached 18.2 percent, the highest level recorded by CWK Research since the second quarter of 2004, marking an increase of over 1,380 bps since the second quarter of 2020.

In the third quarter, an additional 114,000 square meters of office space was added to the market. This, along with the significant volume of returned office spaces due to major corporate occupiers rationalizing their office needs, has increased the volume of vacant spaces. Thus, in the medium term, vacancy rates are expected to remain high due to the total ban on POGOs and the implementation of the CREATE MORE Bill.

Average asking rents for prime and grade A office spaces, CWK Research said, experienced a slight decrease in the third quarter, marking the fourth consecutive quarter of decline. The average headline rent for prime and Grade 'A' developments in Metro Manila closed at P1,003/sqm/month, a 67-bps decrease from the reported average of P1,010/sqm/month in the previous quarter and a 363-bps decrease from the average of P1,041/sqm/month in the same quarter the previous year.