MANILA, Philippines - Office rental rates in key central business districts in Metro Manila are expected to continue rising this year, according to global real estate service firm JLL.
Lizanne Tan, JLL Philippines head of tenant representation, said office rental rates are expected to continue going up in major central business districts such as Makati, Bonifacio Global City and Quezon City.
"For office rental rates, due to the continuous increase in demand for office space, including the amount of pre-commitments that we've had in the last few years, rental rates in most CBDs have been rising. (Rents in) most cities, especially major cities, have been rising since 2013. Our forecast is come second half of 2014, they will continue to increase," she said in a briefing last Thursday.
In the second half of 2014, JLL forecasts Makati CBD prime rental rate to go up 4.4% to P1,180 per square meter a month from P1,130 per square meter in the first half of 2014.
For Makati CBD Grade A space, rental rates will jump 5.7% to P920 per square meter a month in the second half of the year, while rates for Grabe B space will see a 6.7% increase to P790 per square meter.
Office space in Bonifaco Global City will also see a 6% jump in rental rates to P870 per square meter in the second half, while Ortigas rates will go up 2.6% to P600 per square meter.
Quezon City office rental rates will have the biggest increase, 8.2% to P660 per square meter a month by the second half.
Office rental rates in Northgate Cyberzone, Alabang will be flat at P570 per square meter a month.
More office supply coming
Tan said there is continued strong demand for office space from business process outsourcing companies and corporates.
This year, Tan said they expect 773,800 square meters of office space to be delivered in seven business districts in Metro Manila. Nearly half or 352,000 sqm of the office space to be delivered in 2014 have already been pre-committed.
"Although our pipeline seems quite high for 2014, with the amount of pre-commitments that we have today, we feel that the balance of a little over 400,000 sqm of space is manageable due to the increasing demand for office space," she said.
Most of the new buildings will be in Fort Bonifacio (203,900 sqm), Ortigas Center (157,100 sqm) and Quezon City (143,900 sqm).
Some buildings such as SM West Cyber, SM Aura Premier and 8 Campus Place 3 have already been fully leased.
"Some buildings are due to be completed by Q4, and based on experience, some of these may slip into 2015 which means the total stock we have will be manageable. Almost 50% of the total stock that we see have already been leased today... Around 70% of the Quezon City stock has already signed leases today. In BGC, if you are an occupier that requires anywhere between 2,000 square meters and up, your options are probably only 2-3 buildings today," Tan added.
In 2015, 622,100 sqm of office space will be delivered. As of now, 154,000 sqm of this space have already been pre-committed.
"We think it would be wise for tenants to start thinking ahead and consider pre-commitments, especially if there are certain locations that they want to secure. Also, it gives them the ability to secure favorable terms as early as now," Tan said.