New CBDs, a property consultant's solution to traffic

Business World by Daphne J. Magturo, 11-26-2014

It's an advice targeted not at the Metropolitan Manila Development Authority -- which has the mandate to regulate the use of thoroughfares -- but rather at local governments, property developers and potential locators.

KMC MAG named two potential CBDs: Quezon City and the Bay Area.

Rental rates there are cheaper, it said.

Quezon City, which has an average rental rate of P635.4 per square meter (/sq.m.), has a vacancy rate of 3.5%, "similar to prime CBDs," KMC MAG Vice-President Yves Luethi said in a briefing on Wednesday at the Makati Shangri-La Hotel.

"Quezon City is the largest city in Metro Manila, it is the location of numerous government offices, it is the home of major broadcasting networks and major educational institutions, and has an extensive railroad and road network," Mr. Luethi said.

To make Quezon City a "full-fledged CBD," the government must establish an infrastructure that connects the subdistricts and provide public transport options.

Another potential CBD is the Bay Area -- the reclaimed area near Manila Bay -- which houses the state-run Entertainment City and the Mall of Asia complex. It has an average rental rate of P589.2/sq.m. and a vacancy rate of 3.5%, Mr. Luethi said.

The Bay Area is poised to be a "tourism hot spot," along with the construction of the Aseana City, the Metropolitan Park of the Metrobank Group, and the 600-hectare joint Pasay-Parañaque reclamation project of the SM group.

However, the Bay Area still needs "proper support infrastructure," including roads, public transport, and health care facilities, among others.

"We are suggesting developers to further push into those markets," KMC MAG Head of Capital Markets and Investments Jose Carmelo J. Porciuncula said.

KMC MAG data showed that the average rental rate in Makati CBD is P940.5/sq.m.; Bonifacio Global City, P827.3/sq.m.; and Ortigas CBD, P584.8/sq.m.

Mr. Porciuncula noted that vacancy rates across CBDs are below 5%, with the Ortigas district the only one with above 5%, "but still single digit."

"In terms of take up that's actually quite impressive," Mr. Porciuncula said. "There is still healthy demand, there are no indications as of now that the office segment has overheated."