Office rents in Makati City seen to fall in the first half this year, report says
03/11/2009 | 04:39 PM
MANILA, Philippines - Office rents in Makati City, the Philippines’ premier financial district, are expected to fall until the second quarter of the year if market conditions continue to worsen due to global turmoil, a report said.
Other emerging business districts in the country are likely to follow the same trend, Jones Lang LaSalle Leechiu, a global real-estate services company, said in a report entitled "Offshoring and Outsourcing (O&O): Charting the State of the Office Demand in the Philippines."
Average monthly Grade A rentals, or office spaces in prime areas, in Makati “have gone down by 34 percent to P800 per square meter from levels seen in early 2008 while average monthly rentals in Bonifacio Global City have been flat at P600 to P800 per square meter due to the area's “ample labor pool that is strongly sought after by O&O companies,"" Claro dG. Cordero Jr., the company’s research and consulting head, said in the report.
"The forecast decline in rental rates is perceived to be due to the expected slow growth in demand from O&O companies and the anticipated oversupply in the next two to three years," he said.
Office rental growth in the Philippines will continue to be challenged by uncertain demand for office space due to both the weaker short term demand from the O&O industry and the lackluster performance of the traditional demand drivers – MNCs (multinational companies) that are engaged in financial and IT-related services," he added.
Cordero noted the expected new office supply has been "substantially" reduced by seven percent since September, pointing out that the influx of business process outsourcing (BPO), IT outsourcing, and engineering services outsourcing has accelerated recovery of office rentals in the country.
The Makati CBD is host to about 70,000 BPO seats with 500,000 square meters of office space while Bonifacio Global City has 25,000 seat covering 150,000 square meters, he said.
Next: Developers examine locations outside Makati as BPOs look for labor in rural areas
