Net absorption rises further as lease volumes increase

• Net absorption rose to 82,853 sqm, driven by move-ins exceeding move-outs and new supply with occupied spaces. Notable deals tallied include an 1,100-sqm lease by a BPO firm in Taguig City, and a 3,280 sqm lease by a corporate firm in Makati City.
• Meanwhile, move-outs were observed, albeit fewer than in the preceding quarter. Notable move-outs in the quarter included 2,965 sqm by a BPO firm and 3,270 sqm by a corporate occupier in Makati.

Introduction of one development adds around 68,900 sqm of new supply

• The International Finance Center in Taguig City added 68,900 sqm of office space to existing stock. The completions of Filinvest Buendia and Altaire Tower in Makati City were moved to Q3 2024, bringing the quarter’s estimated supply to 103,800 sqm.
• The vacancy rate fell further to 17.3%, down by 54.2 bps q-o-q, as leasing volumes rose and move-outs declined in the quarter. However, vacancy is expected to rise in the coming quarter, as most of the supply should be completed in the short term.

Rents and prices see upticks

• Office rents rose by 1.2%, reaching PHP 1,125.2 per sqm, per month. Most of the office buildings retained their rates, while the new development, International Finance Center, recorded above-average rents, raising the overall average.
• Prices saw an uptick of 0.9% to PHP 179,982 per sqm in Q2 2024, backed by the healthier investment market seen in the quarter. Price hikes may continue in the next quarters as the central bank could reduce rates with inflation remaining manageable.

Outlook: Volume of new supply to put pressure on vacancy levels

• Leasing activity is expected to stay relatively steady in the second half of the year as firms expand and settle their future office space needs. Downsizing may also slow down, as some firms have already finalised their office space requirements.
• Most of the landlords are expected to retain rents for the remainder of the year as vacancy levels remain elevated. Nonetheless, new prime developments with higher take-up are expected to drive up rents, which may raise the market average.