By Richmond S. Mercurio
(The Philippine Star) | Updated November 17, 2015 - 12:00am
MANILA, Philippines -
Office rents in Metro Manila’s major business districts are expected to drop
between three to five percent in the next 12 months as a slew of new office
supply come in, real estate services firm Colliers International Philippines said.
Colliers, in its latest
report, said the influx of new supply would dampen office rents in major
business districts in Metro Manila in the coming months after it rose an
average 1.8 percent during the third quarter of the year.
For the July to September
2015 period, Colliers reported that premium buildings in the Makati central
business district increased rates almost four percent from the previous quarter
as extremely low vacancy rate for the segment pushed rates higher.
Rental growth rates for
both Grade A and Grade B offices, meanwhile, were much stable at 1.23 percent
and 1.39 percent, respectively.
“However, the strong
leasing activity experienced throughout much of the year is expected to taper
as the huge influx of new supply is expected to impact overall vacancy,”
Colliers said.
The real estate services
firm said it has already observed some developers close leasing deals for new
buildings with net effective rents that are significantly lower than their
headline rates.
“This is likely due to the
developers’ recognition of the high levels of upcoming supply in the next
couple of years, and they would rather put contracts in place at lower rates
today rather than risk having their spaces vacant for an extended period of
time. Thus, Colliers sees rents to start correcting on a wider basis through
2016,” it said.
For next year, Colliers
said it expects 733,765 square meters of net usable area added in Metro
Manila’s office sector, higher than the 503,231 square meters of expected new
supply this year.
As a result, Colliers said
office rents in Makati CBD and Alabang are seen declining three to five
percent, Pasay City four to five percent, Fort Bonifacio five percent, and
Ortigas Center and North EDSA three to four percent.
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