Market Update: Cebu Office Market (1Q/2016)

With its low rental rates, consistently growing economy, and large pool of talent, Cebu City proves itself a force to be reckoned with, not only within the Philippines' group of growing central business districts (CBDs), but also across the BPO industry worldwide. Cebu City now ranks 7th in the latest 2016 Tholons' Top 100 Outsourcing Destinations report, a point higher from last year's top 8. The vibrant community and low cost of living in Cebu also continue to drive both local and foreign investors and talented individuals to the city, now emerging as the top alternative to congested Metro Manila.

Cebu's real estate sector is also benefiting from the investors' positive sentiment, as local players implement their massive CAPEX plans to cover new launches and ongoing developments in the city. Major investment activities in the city include the development of Deca Homes Mactan's 307,629-sq m site, a joint venture to develop the 200,000 sq m Mandani Bay, and the development of reclaimed area South Road Properties, which consists of two lands with areas of 192,385 sq m and 263, 384 sq m respectively.

Thriving Cebu office market

Cebu's office rental market is expected to continue its solid growth in the past few years, although it might slow down in the next months due to the entry of new supply with several office components.

Cebu still commands the lowest rental rate among PH's key business districts; in 2015, the city's average net rental rate is at Php 515.60 per sq m, with an upper net rental rate of Php 650.00. Despite its high vacancy rate of 12.8% this quarter, however, Cebu's rental rate also increased by 8.1% YoY, now at Php 528.30/sq m per month.

This year, upcoming supply in Cebu include Pacific World Tower in Mactan Newtown, Philam Life Cebu in Cebu Business Park, Avenir along Arch. Reyes Ave., and BPI Cebu Corporate Center in Cebu Business Park.

For more information on leasing or renting Cebu office space, you may reach us at +63 2 403 5519 or via [email protected].