THE local office sector’s vacancy rates dropped to 18.4% in the first half due to increasing office space occupancy, according to Colliers Philippines.
Approximately 123,000 square meters (sq.m.) of office space were occupied during the six-month period, Colliers Associate Director for Office Services Kevin Jara said during a briefing on Thursday.
During the second quarter alone, net take-up rose to 93,900 sq.m., more than triple the 28,900 sq.m. recorded during the first quarter.
Colliers said that about 220,000 sq.m. of office space would be occupied by the end of the year, revising its initial projection of 116,000 sq.m. due to “favorable” market conditions.
“However, we still project that vacancy rates would still peak at up to 21.1% due to the new supply that is coming in the market over the next few months,” Mr. Jara added.
Colliers reported transacting about 306,000 sq.m. of office space during the six-month period, marking a 5% decline year on year.
It stated that traditional offices occupied the majority of space at 126,000 sq.m., including government agencies, telcos, insurance firms, and flexible workspace operators.
The Information Technology and Business Process Management (IT-BPM) sector followed, accounting for 41% of the transactions or 125,000 sq.m.
Additionally, it reported that Philippine Offshore Gaming Operators (POGOs) transacted about 55,000 sq.m. of space, with the majority within the Bay Area.
Meanwhile, Mr. Jara said that the office market witnessed a lower completion of supply during the three-month period at 81,000 sq.m., down from 150,000 sq.m. the previous year.
“We saw two buildings completed during the second quarter… [this was] lower than what we have seen in the last year as developers continue to reassess and rationalize their portfolio launches,” he said.
The firm projects about 538,900 sq.m. of additional supply coming online in the second half of 2023, with Fort Bonifacio, Ortigas central business district, and Quezon City likely accounting for nearly two-thirds of the new supply.
Mr. Jara added that the firm has seen more projects being put on hold at 402,000 sq.m. being removed from the pipeline.
“In our view, these projects may be redeveloped or reactivated by developers in the future,” Colliers said. — Adrian H. Halili