Property advisory firm Colliers International Philippines said Wednesday it expects office vacancy rate to rise to 11.6 percent in 2021.
CIP said in a year-end analysis office space take-up would hit 250,000 square meters next year, as new supply was expected to reach 632,600 sq. m.
It said for the residential sector, some 7,270 new units were expected in 2021, up by 21 percent from 6,000 units in 2020. More than 75 percent of the upcoming supply would likely come from the Bay Area as selected projects in 2020 were delayed to 2021 because of temporary work stoppage.
It said that in the retail sector, it was expecting the delivery of about 304,700 sq. m. of new retail space in 2021.
“We project vacancy to reach 13 percent as we see a rebound in consumers’ confidence and purchasing power. Lease rates should continue to drop by about 2 percent in 2021,” said Colliers head of research Joey Bondoc.
Colliers said that in the industrial space, it was looking at more active take-up in 2021 and 2022 because of manufacturing and logistics investments. It expects warehouse lease rates growing at a faster rate than land leasehold given the growth of e-commerce and online deliveries.
The firm also expects the completion of about 2,100 hotel rooms in 2021. It said the increase in hotel supply and subdued foreign arrivals due to the pandemic should keep occupancy rates at sub-50 percent levels even at the end of 2021.
Colliers believes that developers should continue to adapt to the evolving preferences of investors and tenants to survive in a property market that has been redefined by the pandemic.
“In our opinion, developers should continue converting and repurposing assets to take advantage of opportunities brought about by a lockdown economy. We recommend that developers and tenants continue to monitor opportunities in the market especially with the government-projected economic rebound in 2021,” Bondoc said.
Colliers said office landlords should be proactive in offering alternative leasing schemes to tenants while mall operators and retailers should ramp up omni-channel strategies to take advantage of pent-up demand while condominium developers should be on the lookout for attractive sites and price segments.