Report Says That Office Vacancies in NCR Will Continue Until 2025

With the “commendable rebound” in office net absorption last 2022, KMC Savills Inc. stated that there will be continued office space vacancies in the National Capital Region (NCR) at least through 2025.

KMC Savills Inc Senior Manager for Research and Consultancy, Frederick Rara has stated that the developers should not expect occupancy rates to return above 85% of office stock in the next two to three years.

According to Rara, the top submarkets can divert prolonged office supply but the Makati central business district (CBD) and Ortigas Center remain at risk if office demand from the business process outsourcing (BPO) sector loses demand due to provincial markets.

“We maintain our recommendation to landlords to prioritize occupancy over yields in 2023.”

Last 2022, the Metro Manila office market rebounded with a net absorption of around 270,900 square meters, which is a reversal of the negative take-up in the previous year.

Bonifacio Global City (BDC) demand took up for more than half of the yearly demand with 141,000 square meters. This is also predicted to be one of the drivers of the performance of Metro Manila this 2023.

KMC Savills says that “We forecast net absorption to slightly increase in 2023, but may be isolated in the top submarkets, such as Makati CBD, Ortigas Center, Quezon City and Bay Area in Manila,”

According to the company, there is an office supply glut in Metro Manila.

“With almost 1.7 million square meters of vacant Grade A office space, another 1.2 million square meters in the pipeline, changing occupier strategies, and rising interest rates, the office market is in an unsustainable condition at these rates,” said the company.

Source: Business Mirror