Forecast Decline in Metro Manila Office Space Rental Prices Amid Rising Vacancies

JLL, a prominent commercial real estate and investment management firm, projects a slight decrease in office rental prices in Metro Manila for the year 2024. According to JLL’s research, the average rental price is expected to settle at P1,000 per square meter, a modest drop from P1,005 at the end of 2023.

During a press briefing in Makati City, Jan-Loven De Los Reyes, the head of research at JLL, reported a 0.2% decrease in rental prices in the first quarter compared to the previous quarter and a significant 3.4% drop from the first quarter of 2023 when the price was P1,039 per square meter. This downward trend in rental costs is attributed to an increase in available office space with about 500,000 square meters expected to enter the market this year. This new addition is likely to push the average vacancy levels to around 22%, a rise from the 19.9% recorded in the first quarter.

Parañaque City leads in vacancy rates at 50.4%, followed by Manila City at 38.1%, and Muntinlupa City at 28.3%. Even central business districts such as Ortigas, Makati, and Bonifacio Global City are experiencing lower but increasing vacancy rates.

The shift towards more flexible work arrangements, including remote and hybrid models, has contributed to reduced demand for traditional office spaces. Many companies, particularly within the BPO sector, are downsizing their physical office requirements, which further influences the market dynamics. Despite these trends, the BPO industry remains a robust contributor to office space demand, particularly in sectors like IT services and professional and business services.

This evolving landscape signals a pivotal adjustment period for real estate in Metro Manila, impacting both rental strategies and commercial property valuations.