The Philippines’ office net absorption finally turns positive after seven quarters

Net take-up was at 26,400sqm in Q2.

A total of 306,100 sq m (3.3 million sq ft) of new office space was completed in the Philippines in Q2, representing a 53% YOY increase. 

Meanwhile, Colliers reveals net take-up hit 26,400 sq m (285,100 sq ft), up from -130,100 sq m (-1.4 million sq ft) in the previous quarter: the first positive net absorption following seven consecutive quarters of negative net take-up. 

Here’s more from Colliers:

This demand was led by outsourcing companies and traditional occupiers engaged in legal services, engineering and construction firms, as well as flexible workspace operators. In residential, the completion of 560 units was recorded in Q1, down 86% YOY. 

Further, the delivery of 10,500 units in 2022, is up 20% YOY with the Bay Area accounting for 57% of new supply. Pre-selling launches in Q1 were down 80% QOQ at 1,500 units, and saw pre-sale take-up of 3,100 units, a 16% QOQ uptick. We see optimism in residential, after vacancies in Metro Manila dipped to 17.8% in Q1, the first recorded decline in vacancies following 11 consecutive quarters of increase.

Forecast

We expect net take-up of offices to reach 350,000 sq m (3.8 million sq ft) as firms carry out expansion plans and fulfil return-to-office mandates over the course of the year. In the residential market, demand for condominium leasing should rise over the rest of 2022, with expatriates returning to the country and more local workers going back to their workplace.