Office vacancy rate hits 20-year high

Metro Manila's office vacancy rate in the third quarter hit its highest level in 20 years as firms streamlined office space requirements and new supply was added to the market, according to commercial real estate services firm Cushman & Wakefield.

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In its latest Market Beat report, Cushman & Wakefield said the average vacancy rate in Metro Manila by the end of the third quarter reached 18.2 percent, the highest level estimated since the second quarter of 2004.

It said 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," Cushman & Wakefield said.

The firm expects vacancy rates to remain high due to the total ban on Philippine offshore gaming operators (POGOs) and the implementation of the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy or CREATE MORE bill.

The bill, which just needs the signature of President Marcos to become law, supports flexible work arrangements and is likely to lead to more vacant spaces.

According to Cushman & Wakefield's report, average asking rents for Prime and Grade A office spaces have experienced a slight decrease in the third quarter, marking the fourth straight quarter of consistent decline.