Colliers International Philippines sees higher net take-up of office space towards the end of 2023.
Colliers said it expects net take-up to reach 220,000 square meters as vacancy rate started to decline in the first half.
Its first semester report showed improved transactions and slowdown in non-renewals, with uneven recovery in rents experienced across Metro Manila submarkets, with rental recovery noted in Makati central business district, Fort Bonifacio and Ortigas central business districts.
“Elevated vacancy is still expected due to more supply coming online in the latter part of the year. Colliers believes that landlords and tenants should continue seizing opportunities given the current tenant-leaning market,” the report said.
It said delivery of new buildings would likely raise vacancy to 21.2 percent by end-2023.
Net absorption for the second quarter improved, driven by higher transactions volume coupled with the slowdown in vacated spaces.
Occupiers may consider implementing flight-to-value or incorporate flexible workspace in their real estate strategies. With the increased interest in environmental, social and governance (ESG) and diversity, equity and inclusion initiatives, landlords can work with tenants on office renovations and include these corporate initiatives within building amenities and common areas, Colliers said.
The report said net take-up in the second quarter reached 93,900 sq. m., more than triple the 28,900 sq. m. posted in the first quarter.
Colliers recorded the delivery of 80,400 sq. m. of new office space in the second quarter. It expects the completion of 668,400 sq, m. by end-2023, with Ortigas CBD and Fort Bonifacio covering nearly half of the new supply.
About 402,000 sq. m. in the pipeline were put on hold or shelved by developers in the first half, it said.
“In our view, these projects may be redeveloped or reactivated by developers in the future. From 2023 to 2025, Colliers sees the completion of 492,400 sq. m. annually. This is only half of the 1 million sqm completed annually from 2017 to 2019, a period wherein completion was positively influenced by the POGO sector,” the company said.