Metro Manila Office Vacancy Rate of 16.2% Hits New High

A real estate advisory firm has noted that the average office vacancy rate in Metro Manila has hit a new recorded high of 16.2% in Q2 of 2022 and the net takeup of office space is still at a negative.

US-based Cushman and Wakefield released its latest Philippine Office and Investment MarkeBeat Report mentioned that office space returns outpaced takeup despite easing of pandemic restrictions that led to more economic activity.

“Aside from observed space returns, the number of untaken spaces in newly completed buildings contributed to the continued increase in vacancy. The estimated overall vacancy rate further climbed to 16.2 percent, higher than the revised Q1 2022 figure of 15.4 percent. This new record-high vacancy rate is also higher than the year-ago figure of 11.2 percent,”  said the report.

The vacancy rates are predicted to stay high because of renewed construction activities. In Q2, an estimated 47,400 square meters worth of Grade A office spaces were added to Metro Manila’s stock. The total stock is now at 91 million square meters.

“While market activity is improving, rightsizing initiatives continue to be observed. The financial impact of the pandemic also motivates some occupiers to consider relocating to more cost-effective buildings and even submarkets. This has pushed a couple of landlords to recalibrate their rents in order to remain competitive,” stated Tetet Castro, Director and Head of Tenant Advisory Group at Cushman and Wakefield.

Average rent prices in prime and Grade A office spaces contracted by 2.7% year-on-year because of elevated vacancy rates.

Source: Philstar