Metro Manila office vacancy rates to rise 10-11% in 2019

Vacancy rates for Metro Manila’s office spaces are expected to rise in double-digit terms next year as supply overwhelms demand, according to real estate services firm KMC Savills Inc.

“Vacancy rates will get to double-digit by 2019 ... I think it’s around 10 to 11 percent,” KMC Savills managing director Michael McCullough said during a press briefing in Makati City.

The vacancy rate stood at 4.5 percent of the total net take-up of 629,500 square meters in 2017.

The net take-up is expected to be consistent at around 500,000 to 600,000 sqm against 2 million sqm of projects to be added in the pipeline by 2019, prodding the overall vacancy rate to peak next year, McCullough noted.

Despite rise in vacancies next year, he said it was “still a very healthy number,” although unheard of in 10 years.

“We just haven’t seen that number for a very long time ... The last time we saw double-digit vacancy rate was in 2008, during the financial crisis,” McCullough noted.

The supply and demand situation, however, does not necessarily translate to lower property prices, he said.

“Some landlords will be a lot more flexible, particularly in mixed-use developments, where they can get additional revenue from the retail component or the residential value,” he said. —VDS, GMA News