Big growth in office space demand in Metro Manila
Makati, Taguig, and Bay Area remain top 3 choices
By Monsi A. Serrano
The office sector had a strong start to 2019.
That is according to Pronove Tai International Property Consultants’ President and CEO Monique Pronove.
Addressing a media forum at the Pronove Tai International Makati Office on Wednesday, April 10, Pronove said: “Stock grew by 3% with 276,000 square meters (sqm) supply in the first three months of 2019. Of the total stock of 10.9 sqm as of Mar. 31, 2019, Makati City and Taguig City remained the two largest office districts. While the third largest district, Ortigas Center, also recorded the fastest growth this quarter at 6% based on a 94,000-sqm completion.”
The office space expansion referred to in Ortigas, being the Podium West Tower.
What’s interesting in her report is that while there are obvious delays in the construction of more buildings, the increase in supply remains steady.
Ms. Pronove observed: “Despite a 30% delay in construction delivery, the office supply in the first quarter was still 31% higher than the quarterly average in 2018. We projected 21 building completions this quarter but only saw 15 buildings delivered,” Pronove explained.
The significant growth in the demand of office spaces is attributed to the advent of Philippine Offshore Gaming Operators, also known as “POGO,” with a growth of 188% year on year.
But the Information Technology and Business Process Management (ITBPM) industry, which has been an economic pillar and significant contributor to the GDP, remains the top driver for office spaces demand.
Interestingly, most of the ITBPM companies prefer Taguig City as the most ideal location.
“POGOs’ leasing behavior has evolved into pre-leasing to match their requirements. Since there is scarcity of available space in Makati and Bay Area, Pasig and Parañaque have been the alternative locations for POGO,” Ms. Pronove explained.
“The significant increase in demand is a good thing for the industry but for ITBPM specifically, we recommend continuous upgrading toward high value services in the Knowledge Process Outsourcing sub-sector. This will help make our country competitive and enticing to ITBPM investments,” she said. “We continue to call on the government to fast track PEZA (Philippine Economic Zone Authority) proclamations.”
Meanwhile, Pronove Tai International Property Consultants Research Manager Mike Munoz said he believes that the way to address the delays in construction is curbing the apparent cement shortage.
“The delay in building completion this quarter can be attributed to the cement shortage and, if not immediately resolved, can lead to further delays throughout the rest of the year. There is an expected annual demand of 32 million metric tons, while we only locally produce 25-27 million metric tons.”
He warned that the imposition of the temporary tariff on imported cement can lead to further delays.