PRE-COMMITMENT LEVELS for the Philippine office market remained at healthy levels despite the coronavirus pandemic, JLL Philippines said.
Janlo de los Reyes, head of research at JLL Philippines, said in an online forum on July 17 that only 130,000 square meters (sq.m.) of supply or constructed office space, was completed during the first half of the year.
Construction work on office projects was stopped for at least two months after the National Capital Region was placed under enhanced community quarantine (ECQ) in mid-March.
Mr. de los Reyes said in terms of total vacancy, the average rate for the second quarter was 7%, higher than the 6.8% average during the previous quarter.
Manila City had the highest vacancy rate at 19.8%, followed by Quezon City with 16.5% and Pasay City at 8.2%.
Rates of pre-commitment, or the leasing of space to occupiers even before the completion of supply, remained healthy for the first quarter of the year at 41%.
Mr. de los Reyes said this is in line with the average pre-commitment rates of 35%-45% in previous years.
Muntinlupa had the highest pre-commitment rate at 56%, followed by Makati City at 40% and Taguig City at 36%.
By sector, traditional offices was the biggest demand driver with a share of 46%. This was followed by the information technology and business process management sector (IT-BPM) with 37%, flexible workspaces with 14% and Philippine offshore gaming operators (POGOs) with 3%.
In the previous quarter, the IT-BPM sector accounted for the bulk of demand with 59%, while traditional offices cornered 39% and flexible workspaces with 2%.
Mr. de los Reyes pointed out the growth for flexible workspaces was particularly remarkable, considering the challenges it faced during the community quarantine.
“We’re seeing basically a mixed bag in terms of the response of flexible workspace landscape towards this pandemic. For some flexible workspaces, they’ve definitely taken a hit. At the same time, for some, they’re still seeing a bit of demand, especially for those who are located in core business hubs because we’re seeing a lot of corporate and also BPO companies who are seeking seats or at least sites that are close to their employees,” he said.
While this may seem promising, Mr. de los Reyes advised real estate firms to remain vigilant.
“Despite this strong demand, we are still quite cautious about what will happen in the next couple of years because… we are noting a lot of supply slippages from the first half of 2020 that may spill over to 2020 and 2021. This will probably impact a lot of the office take-up and may push down the average pre-commitment levels, moving forward,” he said.
“The State of Real Estate, Offices, Co-working Spaces: Moving Forward to the New Normal” was an online forum organized by co-working space OpenSpace. —Mariel Alison L. Aguinaldo