Supply lack to push up Ortigas Center rents
by Catherine Talavera of the Manila Times, 07-07-2016
AVERAGE office rental rates in the Ortigas business district are
expected o increase in the coming quarters due to a lack of new
supply amid sustained demand, a real estate services firm said.
"Lack of supply along with the sustained demand for office
spaces in Ortigas Center are likely to support rental rate
increases in the business district for the remainder of the year,"
KMC Mag Group said in a market note.
In the first quarter of the year, average rental rates in the
Ortigas Center increased slightly by 1.4 percent to P632.2 per
square meter per month from the P623.7 per square meter per month
posted in the previous quarter, driven by strong occupier
In a separate report, Colliers International echoed KMC Mag
Group's forecast, noting the improvement in vacancy rates driven by
the take-up of buildings.
"Ortigas Center also registered a lower vacancy rate of 1.1
percent from 1.5 percent in the last three months of 2015,"
Colliers said. "The improvement is attributed to robust take-up in
both Grade A and Grade B buildings."
Net absorption during the quarter registered at around 2,300
square meters, according to KMC Mag Group.
As of the first quarter of 2016, Ortigas Center's current office
stock stood at around 635,199 square meters. Around 110,789 square
meters of new office space is expected to enter the market until
"In terms of new supply, Ortigas won't be seeing new
developments for the remainder of the year, and is only expected to
have an estimated 100,000 sq m++ additional stock in 2017 and
2018," KMC Mag Group said.
In contrast, other business districts are likely to see
decreases in rental rates due to the large amount of supply
expected to come online in the coming years.
"In the next few years, downward pressure on rental rates are
likely to persist as record high levels of upcoming supply are
expected to enter the market," KMC Mag Group said.
Most of the Metro Manila business districts, except for Makati
City, are expecting a large amount of supply to come online until
2019, with Bonifacio Global City accounting for bulk of the supply
at 928,010 square meters. This is followed by Bay Area with 377,754
square meters in the pipeline, Alabang with 305,431 square meters
and Quezon City with 124,244 square meters.
The Makati Central Business District is seen to account for the
least amount of supply in the pipeline with 74,556 square meters
expected to come online until 2019.
"With the surge in new office spaces, landlords are seen to
become more flexible in lease negotiations, aiming to retain
existing tenants and attract new locators," KMC Mag Group said.