Last Updated on March 4, 2019 by
Pronove Tai International Property Consultants urged property developers in Quezon City to offer competitive rates, along with features of accessibility and residential components in stand-alone properties.
To lower office vacancy rates in Quezon City, a property consultancy firm has urged property developers to consider offering more competitive rates.
In 2018, Quezon City registered a vacancy rate of 13%, the highest among Metro Manila business districts, according to Pronove Tai International Property Consultants chief operating officer Monique Pronove during a media briefing.
Metro Manila has registered an overall vacancy rate of 4%, with a new office supply of 845,000 square meters.
In Quezon City alone, a total of 118,000 square meters of new office supply has been added, which caused vacancy levels to increase. The city’s office stock has reached a total of 1.1 million square meters in 2018, with a 12% year-on-year increase.
Pronove predicted that Quezon City will have a growth of 31% in terms of office stock in 2019, which is the fastest in Metro Manila. The city is set to deliver 343,000 square meters (33%) of the expected 1.04 million square meters new office supply which is targeted for completion this year.
With this rapid growth and increasing vacancy rates, Pronove urges property developers to offer competitive rental prices, especially developers of properties with residential, office and retail components.
Pronove added that offering competitive rates for stand-alone properties will attract more tenants and lessees. Adding a residential component may also invite more locators, especially those from the Philippine offshore gaming operator (POGO) market.
If the property developer is targeting the POGO market, Pronove stressed that accessibility and having a residential component close to their workplace is a requirement, since most of the people working in POGO firms are from other countries and would need to rent residences.
In 2018, the average rental rate for Grade A buildings is priced at P850 per square meter, which is a 1% increase from the P848 per square meter in 2017.
Pronove added that the vacancy spaces in Quezon City are not mostly located along EDSA or the major thoroughfares, which could further discourage occupancy and increase the vacancy rates, especially with the number of office supply being completed this year.
Mike Munoz, research manager at Pronove Tai, added that Quezon City’s lack of infrastructure development is another factor which contributes to the high vacancy levels. He suggested that improving the city’s infrastructure and decongesting the city’s traffic, which is considered the worst in all Metro Manila’s business districts, will help increase occupancy in Quezon City.
Despite the high vacancy levels, Quezon City remains to have the third largest market in office take-up in 2018, as reported by Pronove Tai. Quezon City registered 16% or 170,000 square meters of office occupancy in the said year, next only to Taguig City and Makati City, with 24% of the actual transactions (255,000 square meters of office take-up) and 17% of the actual transactions (187,000 square meters of office take-up) respectively in Metro Manila.
The office take-up in the whole area of Metro Manila has also increased by 22 percent in 2018 to 1.1 million square meters, as opposed to the 875,000 square meters of office take-up in 2017.
This demand for office spaces is largely driven by the Information Technology and Business Process Management (IT-BPM) industry. The IT-BPM sector reportedly accounted for 46% of the actual transactions or 490,000 square meters of office take-up. This exhibited a 33% growth in 2018, from only 378,000 square meters of office take-up 2017.
A stronger take-up from the IT-BPM sector has been prevented due to delays in proclamations by the Philippines Economic Zone Authority (PEZA) and challenges posed by the TRABAHO bill, according to Pronove.
Following the IT-BPM sector are traditional firms, with a 29% share in the actual transactions, which accounted for 321,000 square meters. This also showed a 33% increase from the 187,000 square meters in the prior year.
The demand for flexible workspaces also reflected a high increase in office take-up of 258%, which accounted for 37,000 square meters of office spaces in 2018 from only 10,000 square meters in 2017.
The demand from the offshore gaming industry, on the other hand, surprisingly decreased by 21%, from 291,000 square meters in 2017 to only 229,000 square meters in 2018.
Pronove remains optimistic regarding Metro Manila’s office market in 2019, amidst issues with PEZA and the uncertainties brought about by the TRABAHO bill. Accordingly, the growth of healthcare BPOs and fintech (financial technology) will continue to sustain the growth of the IT-BPM sector. Demand for traditional offices, on the other hand, will be mostly driven by healthcare and logistics sectors.
Despite the decrease in office take-up in 2018, the offshore gaming industry is predicted to expand in other areas of Metro Manila, including the Bay Area, Mandaluyong City, Makati City, Las Pinas City, Taguig City, and Muntinlupa City. The growth in the gaming industry is also expected to spill over to new wave cities, such as Clark Pampanga, Cebu City, and Davao City.
Lastly, Pronove added that the entry of the millennials into the workforce and the growth of single proprietorships will drive the demand for flexible offices.
Source: Philippine Star
