Net absorption continues to remain positive as substantial move-ins are recorded

• Net absorption climbed to 19,500 sqm in Q3 2024, owing to a stronger leasing market and more move-ins. Significant transactions were documented, including a 2,785 sqm lease by a BPO firm and a 2,178 sqm lease by an FMCG firm, both in Taguig City.
• Meanwhile, Filinvest Buendia achieved full occupancy, with a government agency leasing approximately 10,000 sqm. However, a BPO firm in Taguig City vacated 2,081 sqm of space, contributing to the quarter’s move-outs.

Around 24,00 sqm of new supply comes on stream in Q3 2024

• The completion of Filinvest Buendia and MJ Tower Fort added 24,000 sqm of office space. Another 35,000 sqm of new supply is expected by year-end. Altaire Tower’s completion in Makati City was delayed to Q1 2025, boosting 2025’s projected supply to 170,000 sqm.
• The vacancy rate held steady at 17.3% in Q3 2024, indicating mixed-market conditions. Tenant departures were offset by substantial move-ins, notably the fully occupied new supply at Filinvest Buendia in Makati.

Rents stay stable, while prices climb

• Office rents were constant at PHP 1,125.4 per sqm, per month, with most landlords maintaining rates to entice tenants. Some well-occupied buildings raised rents, while those with large vacancies cut rates to compete.
• Capital values rose 1.4% to PHP 182,566 per sqm in Q3 2024, buoyed by improved investment sentiment. Further price increases are anticipated as the central bank may cut rates, given controlled inflation.

Outlook: Continued BPO expansion to keep office market steady

• Stable leasing is expected as firms solidify work arrangements. POGO exits may affect certain CBDs, but BPO growth and traditional occupier expansion are likely to buoy the market moving forward. Rightsizing may also slow down as firms settle their working arrangements.
• Most developments should retain their rents as high supply pressure persists. Meanwhile, well-occupied prime buildings may raise rates, potentially lifting the market average. Capital values are expected to grow steadily, boosted by potential interest rate cuts.