KMC Savills is pleased to present the latest Cebu Office Briefing for 4Q 2017. The report provides current data on rental rates, vacancies, and supply pipeline in Metro Manila's central business districts and submarkets for the previous quarter.
- Cebu surpassed expectations as net absorption surged to 67,500 sq m in 4Q/2017. Vacancies dropped in all submarkets which resulted to an overall vacancy rate of 3.8% by the end of 2017. The Cebu Fringe had an impressive run after ending the year with a vacancy rate of 9.4% from 21.3% in 4Q/2016. Much of the performance was driven by Mactan Newtown after Tower One Plaza Magellan was fully leased out upon completion.
- With the notable net absorption, rental growth in Cebu continued to recover following an increase of around 3.4% YoY. It ended the year with an average rental rate of Php 551.2 per sq m / month. Rents in the Fringe were also on an uptrend after accelerating 2.0% YoY in 4Q/2017 compared to a decline of -0.7% YoY in 1Q/2017.
- In 2018, Cebu IT Park is anticipated to receive more than half of the 131,400 sq m of new supply. The new office buildings are not expected to put too much strain on the submarket as vacancies are forecasted to just rise above 6.0% of total stock. In subsequent years, the vacancy rate may rise to double digits if demand begins to weaken, but given the surprise in 2017, we should expect demand to remain robust.