Rental rates in Metro Manila continue rising

Office rental rates in Metro Manila continue rising with an average of 12.5% year-on-year during the third quarter of 2019. This is thanks to the completion of the many prime office spaces in this period, this is according to the real estate consultancy of Cushman & Wakefield (CWK).

CWK also reported that the average asking rent price grew to of P994 per square meter (sq.m.) per month in Metro Manila, a 3.6% increase on a quarterly basis. This was reported on a property report by WK Director for Research, Consulting, & Advisory Services Claro Cordero, Jr.

Mandaluyong City is seen to have the fastest growth with 19.5% year-on-year to P908 per sq.m. per month. This trend is likely thanks to the completion of Podium West Tower and consequent rental adjustments in other buildings.

Meanwhile, Taguig has the highest rate at  P1,249 per sq.m., which is then followed by Makati at P1,235 per sq.m. Parañaque and Pasay’s rents have also surpassed the P1,000 per sq.m mark at P1,050 and P1,025, respectively.

According to the report, “over-all rental yields are estimated to further compress due to further cuts in the Bangko Sentral ng Pilipinas’ policy rate and the continued growth of investors’ confidence in the market.”

As for vacancy rates, Mandaluyong has the highest vacancy rate of 31.2%, while Pasay City has the most compressed at 0.1%. The overall vacancy rate stands at 4.2%, against a total inventory of 7.639 million sq.m.

According to CWK, more than 1.779 million sq.m of office spaces currently being planned and constructed in Metro Manila.

“By end-2019, an additional 520,000 sq.m. of office space is expected to be completed, albeit completion of some developments is likely to spill into early 2020,” CWK said.

Significant projects that will surely add much more space include the Ayala Triangle Garden Tower 2 in Makati City with about 65,000 sq.m., and the SM City North Edsa Towers 1 and 2 in Quezon City with 39,000 sq.m.

CWK also notes that the demand growth from  Philippine Offshore Gaming Operators (POGOs) is expected to slow down because of the government’s decision to suspend the issuance of operating licenses to new players. For the first three quarters of 2019, POGOs were seen as one of the growth drivers for office demand space, especially within the Bay Area in Pasay City.

“On the other hand, the real estate expansion and flight to quality of other local industries (such as financial services and pharmaceuticals), as well as expansion of information technology-business process management companies, will buoy office space demand,” the company said.