Colliers sees better Philippine office take-up in 2024

By Ashley Erika O. Jose, Reporter

THE Philippines’ office property market is expected to improve in 2024 on better demand for office spaces and as companies resume their real estate plans this year, Colliers Philippines said.

“Net take-up will remain in positive territory for 2024,” Kath Taburada, senior market analyst at Colliers Philippines, said in an e-mail. “In terms of office demand and net take-up, we will continue to experience improvement in Metro Manila.”

Expansions and new setups accounted for 70% of transactions as of the third quarter of last year, Ms. Taburada said, adding she expects the net take-up to be sustained this year.

“This indicates that companies are now rolling out their real estate plans that were put on hold by the pandemic or were previously in a wait-and-see situation,” she added.

In a report, Colliers said the take-up is mainly due to the demand from traditional and outsourcing companies, with more workers expected to work in offices.

Ms. Taburada said the net take-up this year is projected to reach 300,000 square meters (sq.m.), 36.4% higher than in 2023.

Tenants are also seen to continue using so-called flight-to-value techniques due to the availability of lower priced quality office spaces in prime locations.

This year’s office supply is expected to reach 538,000 sq.m., while office vacancies will be at 22%, according to the report.

“In 2024, we expect occupiers to continue implementing flight-to-value strategies as more Grade A office buildings are to be delivered,” Ms. Taburada said. About 600,000 sq.m. of office space is expected to be completed this year, she said.

In 2023, the office market gained momentum in terms of demand and net take-up after recording a net take-up of 153,000 sq.m. in the third quarter.

“Two years after the start of the pandemic, the office market finally saw a turnaround in 2022 when it first saw a positive net take-up,” Ms. Taburada said. “In the previous year, we recorded a net take-up of 110,000 sq.m. The positive net take-up is attributed to office demand outpacing nonrenewals and pre-terminations.”

The information technology and business process management (IT-BPM) industry is expected to remain the key driver of the country’s office market growth in 2024, Colliers said, citing the projection of IT and Business Process Association of the Philippines’ (IBPAP) 7-8% growth in staffing this year.

“The office market is seen to benefit from this growth.”

New and existing tenants are also seeking new locations outside Metro Manila for their expansion plans, including Cebu, Pampanga, Laguna, Davao, Iloilo, and Bacolod.

“Incorporating satellite offices in their real estate strategy has become an imperative to retain talent, as some of their employees have already returned to their provinces during the pandemic,” Ms. Taburada said.