Metro Manila office market rebounds in 2022

The capital region saw a net absorption of 270,900 square metres.

The office market in Metro Manila reversed the negative take-up in the previous year and posted a net absorption of around 270,900 square metres in 2022.

In a report, KMC Savills said around half of the take-up in 2022 was from BGC and is expected to be the main driver of the slight increase this year, which will be isolated in the top submarkets.

Despite this, Research Manager Fredrick Rara said the occupancy rate will not go beyond 90%, with the vacancy rate averaging around 20% until 2025.

“There's a lot of demand in BGC. it's the only submarket that has grown in 2022 rents-wise,” he said.

READ MORE: The Philippines’ office net absorption finally turns positive after 7 quarters

“We'd also like to highlight Ortigas Centre. It didn't fall as bad because there was a lot of demand for the newer buildings, and newer buildings tend to have higher rents,” he added.

Before, buildings are getting absorbed before by the time they are completed but the environment now is different as there are work-from-home schemes, and a shift in demand to the provinces, amongst others.

Green and sustainability goals are also being prioritised, he said. In BGC, the vacancy rate is below 5% for green buildings, whilst for non-green buildings, the vacancy rate is close to 10%.

Whilst the outlook for the office market in Metro Manila is “bearish,” Rara said the growth in provincial markets will be bullish, citing the province of Iloilo whose overall vacancy rate is less than 5%.

“That’s really bullish on us because the BPO sector is also expanding outside of Metro Manila," Rara said.