Metro Manila office market to add 1.5M sqm in 2018

Property developers are expected to add around 1.5 million square meters of leasable office space in Metro Manila this year on the back of sustained demand from business process outsourcing (BPO) sector, according to real estate consultancy firm Santos Knight Frank.

The additional office space this year is 25 percent more than the 1.2 million sqm realized in 2016.

“We see more than 1.5 million sqm of leasable space to be added to Metro Manila’s supply this year,” Morgan McGilvray, Santos Knight Frank senior director for Occupier Services and Commercial Agency, said in a press briefing in Makati City on Tuesday.

“BPO companies ... still drive demand in the sector,” McGilvray noted.

US and Australia companies are still the main drivers of the growth in the BPO sector.

“But we’re seeing interests from Chinese BPO companies ... So more Chinese BPOs are expected to come in,” Santos Knight Frank chairman and CEO Rick Santos said.

McGilvray noted the BPO sector will be less “voice-driven,” more of high-value services.

“It’s less voice and more high value that’s the trend we’re seeing now. They’re going to medical transcription, legal ... high value services—we see the emergence of those being offered in the Philippines,” McGilvray said.

“Voice is going to be there but it’s not the primary driver it used to be. We’re now focusing on high value,” he said.

McGilvray said shared services and companies putting up regional headquarters in the Philippines and are also supporting the office market sector.

With more office space coming into the market, the vacancy rate is also expected to go up in Metro Manila.

“I would expect vacancy rate across Metro Manila to go up ... maybe around 10 or 12 percent. It’s still quite healthy,” he said.

“I don't see that as a problem ... Pre-commitment is still very strong, the buildings are 30- 40 percent pre-committed,” he added. —VDS, GMA News