Manila office spaces running low

Occupancy in office spaces in Manila's key business districts hit a record high in the first quarter, riding on the country's robust economic growth, property consultancy firm CBRE Philippines said. The trend can result in more office developments in other major cities in the country as well as surrounding areas in Metro Manila. "The Philippines is one of the hottest property markets in Asia," Rick Santos, chairman at CBRE Philippines, told reporters at a briefing Wednesday. "The pace and breadth of real estate growth is unprecedented in the country's history," he added. CBRE saw occupancy rates in the office sector hitting 97 percent in the first quarter. Occupancy rates in Metro Manila have been consistently above 90 percent since 2011. Vacancy rates fell to 3.21 percent in the first three months of the year, down from the 3.43 percent in the fourth quarter of last year. Vacancy rates in Makati central business district -- which offer the highest quality Grade A and premium office buildings -- fell to 5.07 percent in the first quarter from 5.45 percent recorded in the quarter previous. At the same briefing, Joey Radovan, vice chairman and head of global corporate services at CBRE, said vacancy rates in Bonifacio Global City (BGC), Ortigas, Alabang, and Quezon City fell below 5 percent in the first quarter. "The decrease in vacancy rates is attributed to the positive economic outlook , cost-effective rental rates and dwindling availability of office spaces," said Radovan. Among the recent economic strides cited were upgrades by Fitch Ratings and Standard & Poor's to investment grade and the 7.8 percent gross domestic product (GDP) growth in the first quarter, the fastest in Asia. Such developments coupled with regionally competitive rental prices have fueled more American and European firms turning to the Philippines for outsourcing. Business Process Outsourcing (BPO) firms continue to take the lion's share of office space, said Radovan, noting that "BPO full-time employees are the highest in BGC, Muntinlupa and Quezon City." Citing BPO sector growth projections made by the Information Technology and Business Process Association of the Philippines, Radovan said office space needs for that segment alone will reach 5 million square meters by 2016. To address that need, new developments in Taguig, Alabang, Makati are coming in. "These cities are listening to the needs of occupiers," said Radovan. Radovan also said Cebu, Bulacan, Pampanga, and fringe areas in Metro Manila "are the next destinations of BPOs and office development." "There is also a lot of momentum in Clark and Subic," Santos said. The development of infrastructure in these up and coming office realty areas, however, are needed to realize their  full potential, he noted. - VVP, GMA News