Metro Manila office transactions jump 154 percent in Q2

Office transactions in Metro Manila surged 154 percent in the second quarter of the year, mainly driven by the outsourcing sector and traditional firms, a property services firm said.

In its latest property briefing, Colliers Philippines said office transactions in Metro Manila reached 84,700 square meters (sqm) from 33,400 sqm in the same quarter of last year, as occupiers expand and implement flight-to-cost and flight-to-quality measures.

“We believe that lower base rents while offering good quality buildings contributed to the higher office space absorption,”Colliers said.

Colliers outsourcing and traditional firms led office space takeup during the quarter, with around 26,500 sqm coming from the former.

“BPO companies such as Alorica and TaskUs expanded their office footprint in Quezon City, one of Metro Manila’s outsourcing hubs,” Colliers said.

Traditional firms accounted for 56,900 sqm or 67 percent  of total transactions in the second quarter of the year.

Some of the notable transactions from the traditional sector include the Energy Regulatory Commission (ERC) a government agency and China Harbour Engineering.

“In our opinion, these firms are likely to lead office space absorption in the next six to 12 months as the government accelerates its vaccination program across Metro Manila,” Colliers said.

Despite the increase in transactions, Colliers pointed out that net take-up remained in the negative territory for the fifth consecutive quarter at −88,000 sqm as traditional and Philippine offshore Gaming Operators (POGO) firms vacated office spaces and demand for new office space continued to be subdued.

“Colliers has observed that occupiers with upcoming lease expirations are taking a more cautious approach such as shorter or flexible leases to tide them over the next one to two years of uncertainty,”the property services firm said.

“Outsourcing firms have also been taking up spaces, it multiple sites near the residential communities of their employees,”Colliers said.

For this year, Colliers projects net take-up to reach -85,800 sqm, lower than its initial estimate of about 351,300 sqm.

Moreover, it also expects overall Metro Manila office vacancy to rise to 15.6 percent by the end of the year, higher than the 12.7 percent vacancy recorded in the second quarter, due to more office space for the remainder of the year as well as weak pre-leasing.