BONIFACIO Global City (BGC) in Taguig has overtaken Makati central business district (CBD) in offering premium office-space market in Metro Manila.
There will be no new office space to come online in Makati CBD until next year.
KMC Savills Research said the former military camp’s total stock of current office space reached 1.13 million square meters compared with Makati’s a little over 1 million sq m.
From now through 2019, BGC’s development pipeline will reach 843,416 sq m, while Makati only has 74,556 sq m, with the pipeline for the next 12 months limited to Insular Life Makati Building.
BGC’s average rental rate, however, was flat at P881.7 per sq m, as the new addition placed pressure on rental growth rate, while Makati’s soared at an average of P1,004.7 per sq m.
“Looking ahead, rental growth [in Makati] is expected to further increase, since additional office- space stock will remain limited in the next couple of years. This imbalance of supply and demand will likely prevail until the redevelopment of Insular Life Building in 2017 and completion of City Gate Towers in 2018, which will provide an additional 20,000 sq m and 55,000 sq m, respectively,” KMC Savills said.
It added that Brexit has not caused any significant impact on the Philippines so far, as the country’s direct exposure to the United Kingdom remains minimal.
During the second quarter of the year, three new office buildings have been completed in BGC. These are Metrobank Center, Bonifacio Stopover Corporate Center and Uptown Place Tower 3. All of these boosted the property’s total stock with an estimated 124,000 sq m of additional space.
“It seems rental growth is reacting to the large pipeline, as the average rental rate in the district only increased by a marginal 0.1-percent quarter on quarter to P881.7 per sq m per month, from P878 per sq m per month in the first quarter.
Among the other premium property development in the submarkets, Alabang’s vacancy rates continued to improve at 3.2 percent for the second quarter, from the previous quarter’s 4.9 percent, the study showed.
KMC Savills said Alabang is a much-preferred alternative area, rather than the crowded business districts in the northern part of Metro Manila.
“The sustained demand for office spaces and lack of supply in other major CBDs, like Makati and Ortigas Center, has prompted more upcoming developments in Alabang over the next few years; around 220,000 sq m of space is expected to come online by 2018,” it said.
Quezon City’s average rental rate was also flat at P714.5 per sq m per month, but there will be no upcoming supply to enter Metro Manila’s largest city for the remainder of the year due to high availability of space.
The Bay Area continues to have low availability of leasable space, while there has been a decreased market activity seen in Ortigas Center.
KMC Savills said the three submarkets of McKinley, C-5 corridor and other fringe areas in Makati start to strengthen their position in the industry. There is increased focus of office renters in these areas.