Metro Manila (CNN Philippines, October 26) — The Metro Manila property market saw “massive losses” in the third quarter as companies and even POGO firms scaled down or shut physical offices amid the pandemic.
Consulting firm KMC Savills said a sustained downturn in business activity due to the global COVID-19 crisis pushed more firms to move out of a total of 47,800 square meters (sq.m.) of leased office spaces between July and September.
In its third quarter Metro Manila Office Briefing report, KMC Savills said the vacancy rate rose to 7.3%, which could rise further as building completions of upcoming projects have also been delayed by quarantine rules.
“One of the biggest movers during the quarter was the C5 Corridor,” the report read. “Although not included in Metro Manila’s major submarkets, it was deeply affected by reduced demand from the Philippine Offshore Gaming Operator (POGO) sector. The submarket experienced heavy losses after 40,200 sq. m. of space was vacated during the quarter.”
The rest of Metro Manila’s business districts are yet to suffer significant losses from the POGO exodus, but could be seen soon once the gambling outsourcing companies formally terminate their existing leases.
Makati’s central business district, which remains the biggest market for commercial space, saw vacancies rise to 3.34%, the first time it breached the 3% mark since the second quarter of 2017. In turn, average rents also slipped by 0.3% from the previous quarter to ₱1,146.10 per sq.m. monthly.
“We expect a lower demand rate in the short term as organizations reevaluate their office requirements. Considering the uncertainties brought by the pandemic, we foresee vacancies in the market to remain above 3% in the coming year,” KMC added.
Lockdowns meant to curb COVID-19 infections may have driven companies to scale down or even close on-site operations, with thousands of employees opting to work from home. The economic downturn, however, forced some businesses to shut down for good.
Meanwhile, KMC said 9,600 sq.m. of commercial space were freed up within Bonifacio Global City in Taguig, while average rent also slid to ₱1,035.40 per sq.m. in a month. Pre-leasing for future rentals climbed, although new projects will likely drive vacancies in the area beyond 5%.
The same trend was seen for Ortigas Center in the Mandaluyong-Pasig area, Alabang, and Quezon City, where the vacancy rates rose to 17.6%, 5.8%, and 13.8%, respectively.
The Bay Area spanning the cities of Parañaque and Pasay saw muted activity, the property firm said, but concerns continue to pile up with the decline of POGO operations.
The government has made it harder for offshore gaming companies and their service providers to go back to business after the lockdown, with its regulator reporting decisions of some firms to pull out its operations in Manila.
“As companies formalize terminations of their current leases, wholesale changes to rent and occupancy levels could be observed in submarkets previously dominated by the POGO sector,” the report added.
Smaller property markets also saw increased vacancies, the firm said, such as the McKinley area in Taguig, the fringes of Makati such as Rockwell Center and the Circuit area, the C5 Corridor spanning Quezon City to Pasig, and Greater Ortigas which includes Capitol Commons and Greenfield District.
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“As companies formalize terminations of their current leases, wholesale changes to rent and occupancy levels could be observed in submarkets previously dominated by the POGO sector,” the report added.
