Metro Manila rentals fall amid glut in office space

RENTALS in the Philippines’ premier financial district tumbled this month from a year ago as the glut in office space persisted, Jones Lang Lasalle Leechiu said Monday.

In a briefing, David Leechiu, the consulting firm’s country head, said rentals within the Makati central business district fell 35 percent in January compared with the same month last year.

“Oversupply and competition among the different districts had [a] pulling effect on the rental rates, but we see take-up picking up in 2010 and thus shift from a tenant-favored environment,” Leechiu told reporters.

On the average, rentals across the 12 main districts in Metro Manila this month fell by 21.78 percent year-on-year.

Among the 12-main districts, the biggest decline was seen in the prime and B areas of Makati and the Northgate Cyberzone at 33 percent.

For example, the monthly rental for prime lots in Makati City dropped to P700 per square meter from over P1,000 in the same month last year.

“Rental peaked in the first quarter of 2008, [but] now [it is] softening due to competing districts, but [this is] anticipated to stabilize in the fourth quarter of 2010,” Leechiu said.

Last year, approximately 293,000 square meters of office space mostly in Fort Bonifacio in Taguig, and Robinsons Pioneer in Mandaluyong were taken up.

In 2008, there were 1.76 million square meters of available office space, but this is expected to drop to only 360,667 square meters by 2014. The oversupply would be pared down to 281,647 square meters this year from 504,007 square meters a year ago.

Because of this, rentals are already starting to pick up, especially in Fort Bonifacio where the prices have already climbed by 10 percent.

“Bonifacio Global City is becoming the top choice location for companies due to locator-focused facilities, its proximity to Makati and the world class-like environment,” Leechiu said.

Besides Fort Bonifacio, Pioneer and Makati will remain the top choices of office tenants this year.

“Moving on to 2010, we think developers should plan now and finish their buildings between 2012 and 2014. The [business process outsourcing] industry will continue to be a demand driver or the primary source of demand,” Leechiu said. –Chino S. Leyco, Manila Times