Office rent in central business districts is expected to keep climbing over the next three years, says research by KMC Mag Group, a real estate consultancy.
Despite modest rental growth of 2.6 percent year over year, "Makati still quotes the highest rentals as the current upper net rental rate is now at Php 1,400 per sqm per month," states the group's Metro Manila Office Briefing.
"Rentals in the district are expected to keep climbing as no new stock is expected in the CBD until 2018," says the report, which lists the average net rental rate in Makati at P958.6 per sqm per month.
Meanwhile, in Ortigas, rates are projected to rise as, "Other than the BDO Corporate Center, no new leasable space is expected to enter the market until the second half of 2016, which will likely keep the vacancies declining and rental growth increasing." The vacancy rate decreased "by a marginal 20 basis points to 3.5 percent in the quarter," according to the report. Meanwhile, average net rental rate had increased by 3.7 percent year over year, at P609.9 per sqm per month.
By comparison, Bonifacio Global City (BGC) is expecting one million sqm of office space, which should double the stock by 2018, states the report. The report states that "Prime rental rates in BGC continue to be promising with Q2/2015 rates increasing by 6.8 percent year over year," with average net rental rate at P855 per sqm per month.
BGC’s vacancy rate further decreased to 1.3 percent due to low supply turnover and solid take-up at around 16,743 sqm for Q2/2015," says the report. "The additional 190,000 sqm office space for turnover in 2H/2015 will likely increase vacancy as the
market has limited time to absorb new supply despite strong pre-leasing activity."
Quezon City also posted robust growth with average rental rate increasing by 7.8 percent year over year, at P688.1 per sqm per month. The report states, "The low vacancy rate and strong rental growth have placed Quezon City as one of the best performing submarkets in Metro Manila. As a result, property developers now eye the submarket for their projects."