THE vacancy rate for Metro Manila office property in the first quarter is expected to peak later in the year, with rents under pressure because of evolving workplace practices and additional supply coming onto the market, Colliers Philippines said.
“Despite more optimistic forecasts from industry groups, headwinds continue to pose challenges to the office market, which could further derail our projected recovery in terms of net absorption, vacancy, and lease rates,” Colliers said.
In a report, Colliers said vacancies in the first quarter were little changed at 18.7% from 18.8% in the fourth quarter of 2022. Colliers expects vacancies to hit 21% by year’s end, exceeding its previous estimate of 20.2%, due to slow take-up.
Demand for condominium units is improving due to better take-up from professionals and expatriates.
“Rents and prices are still recovering. We saw a contraction in 2020 and 2021 due to the impact of the pandemic. We will likely see slower completion or muted deliveries of new residential units over the next 12 months,” Joey Roi Bondoc, research director at Colliers, said during a briefing on Thursday.
In its report, Colliers said vacancies in the Metro Manila secondary market was little changed to 17.4% from 17.6% a quarter earlier.
Colliers expects vacancies in the secondary market to drop to 16.8% this year as business sentiment improves.
“Upscale to luxury developments will likely remain popular and developers should explore forging joint venture deals for condominium projects that cater to an affluent and discerning market,” Colliers said. — Ashley Erika O. Jose