From former military camp to burgeoning financial district, Bonifacio Global City is now top site for prime office space in Metro Manila
Bonifacio Global City (BGC) in Taguig has surpassed the Makati central business district as the primary location for premium office space in Metro Manila. While the latter continues to be generally recognized as the country’s foremost CBD, its limited supply of office space has displaced it from the top spot.
Makati’s office space stock will remain limited for the foreseeable future, and while this has led to a low vacancy rate of 2.1 percent for the second quarter of 2016, KMC Savills says “it may be difficult for Makati CBD to attract locators as no new stock has entered the market since 2014 and the pipeline for next 12 months is only limited to Insular Life Makati Building.”
The tightened vacancies have pushed the area’s average monthly rental rate to the Php1,000 per sqm plateau, at now a monthly Php1,004.70 per sqm. This is a 1.5 percent increase quarter-on-quarter, and 4.8 percent year-on-year, from the prior quarter’s Php990.40 per sqm per month.
BGC’s Increased Stock Still Being Taken Quickly
On the other hand, the second quarter of 2016 saw BGC increased its office space stock. Metrobank Center, Bonifacio Stopover Corporate Center, and Uptown Place Tower 3 were completed before the first half of the year came to a close, effectively adding an estimated 124,000 sqm of additional office space to BGC’s stock.
This has resulted in the average rental rate in the district increasing by only a marginal 0.1 percent quarter-on-quarter, or from Php878 per sqm per month in the first quarter to an average of Php881.70 by the second. However, what has been remarkable, according to KMC Savills, has been BGC’s impressive net absorption, maintaining a vacancy rate of only 2.7 percent despite the added stock.
New additions will reportedly continue to rise in BGC, as KMC Savills indicated that there is reportedly an estimated 843,000 sqm of leasable space scheduled to be turned over by the end of 2018. While this keeps BGC as the largest office submarket in the metro, the expected increase in its stock is also seen by KMC Savills to lead to an “uptick in the vacancies.”
Alabang: A Viable Alternative
Due to sustained demand and the lack of supply in other major CBDs like Makati and Ortigas Center, Alabang “is seen to be a viable alternative to the crowded business districts in the northern part of Metro Manila.” Alabang’s vacancy rates continue to improve, having ended at 3.2 percent in the second quarter of 2016 after initially starting off at 4.9 percent the previous quarter.
This, according to KMC Savills, is “despite the addition of around 25,000 sqm of office space in the second quarter of 2016.” The sustained demand, coupled with the previously mentioned lack of supply in Makati and Ortigas Center, has prompted further development in Alabang, with an estimated 220,000 sqm of space expected to see completion by 2018.
While BGC may have the largest share of premium office space in Metro Manila, its second quarter ending average of Php881.70 per sqm per month may not be the ideal price for prospective tenants. With a vacancy rate that is half a percent more than that of BGC, and a comparatively lower monthly rental rate of Php614.80 per sqm, Alabang is indeed the most viable alternative at present.
To read KMC Savills’ full report, click here.
Main image via Shutterstock
