PROPERTY consultancy firm Colliers International Philippines reported that office transactions in the National Capital Region (NCR) reached 84,700 sq m in the second quarter (Q2) of 2021, up 154 percent from the 33,400 sq m recorded in Q2 2020 as tenants expanded and implemented flight-to-cost and flight-to-quality measures.
Based on its recently released Q2 2021 Philippine property market studies, traditional firms , such as e-commerce, logistics, telco and lending companies, led the office space takeup from April to June of this year, accounting for 56,900 sq m or 67 percent of the total deals.
This was followed by outsourcing companies that absorbed 26,500 sq m. The remaining 1,300 sq m in new office towers during the period were occupied by government agencies and other businesses.
Meanwhile, from a peak of 1.34 million sq m or 11 percent of office stock in NCR occupied by the Philippine offshore gaming operators or Pogos, they only absorbed 790,000 sq m or 6 percent as of the end of Q2 2021.
Per the study, Ortigas led the office transactions during the period with 26,200 sq m or 31 percent of overall transactions during the period in review.
The diversified professional services and investment management firm attributed the higher office space absorption to good quality of the newly occupied buildings offering lower base rents. Average office rents dropped by 3.9 percent quarter-on-quarter between April and June this year.
Some notable transactions from the traditional sector, it cited, include the Philippines’s Energy Regulatory Commission and China Harbour Engineering, while in the outsourcing side, Alorica and TaskUs expanded their office footprints in Quezon City.
According to the report of Colliers Philippines, there were 142,400 sq m of new office stocks recorded in Q2 of this year from the newly completed Glas Tower in Ortigas and Worldwide Plaza in Fort Bonifacio in Taguig, or 148 percent higher than the 57,400 sq m posted in the same period of 2020.
Looking forward, the company projects new supply to reach 847,600 sq m by end of 2021, down from its previous forecast of 878,200 sq m as developers avoid overbuilding to prevent further increase in vacancies and correction of rents as they await recovery.
Colliers Philippines expects traditional and outsourcing firms that implemented a mix of rightsizing, consolidation, expansion and relocation strategies to continue to lead office space absorption in the next six to 12 months as the government speeds up its vaccination program across Metro Manila.
It observed, however, that locators with lease expirations in the offing are taking a more cautious approach, such as shorter or flexible leases to tide them over the next one to two years of uncertainty, as outsourcing firms have also been taking up spaces in multiple sites near the residential communities of their employees.