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Rising demand pulls up local office rates

By Ayen Infante
09/07/2011 [ tribune.net.ph ]

Makati’s average office rates were the highest among business centers in Metro Manila at P809 per square meter during the third quarter, a regular survey showed.

Rents of Prime and Grade A office buildings across the major business districts in Metro Manila are rising as strong corporate expansionary demand drives leasing requirements for both business process outsourcing (BPO) and traditional offices, according to the second quarter report of CBRE Philippines.

“We believe this is just the start of the projected up-cycle for the Philippine Property Market as determined by real demand and strong macroeconomic fundamentals,” CBRE Philippines chairman Rick Santos said.

In the business districts of Makati and Ortigas where traditional office buildings are concentrated, continued demand by multinational and local companies is supporting the growth in rental levels, the report noted.

Average office rent in Makati increased by 2.65 percent from the previous quarter to P809 per square meter a month (sqm/mo) while that in Ortigas improved during the period to P554 per square meter a month.

The rise in office rents is even more apparent in the BPO dominant business districts of Alabang and Quezon City.

Average office rent in Alabang grew by 6.1 percent from the previous quarter to P501 per sqm/mo. On the other hand, average rent in Quezon City increased by 3.1 percent to P516 per sqm/mo.

Fort Bonifacio rates (BGC and McKinley) inched up as well and average rent is now at P698 per sqm/mo.

Despite the upward trend in rents, vacancy rates across the major business districts were kept below the five percent level.

“Office vacancy rates declined even with the growth in rental levels because of supply pressures,” Santos said, adding that pre-commitments are also active for offices which are still in the pipeline.

The sharpest decline in vacancy rates is recorded in the Fort Bonifacio district which is now at 1.48 percent.

Vacancy rate in Alabang is at 3.08 percent and 2.79 percent in Quezon City.

In Ortigas, vacancy rate is at 2.96 percent while in Makati, vacancy rate is at 4.6 percent.
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