Office leasing volume seen to accelerate in H2

MANILA, Philippines — As the new administration settles in, leasing volumes in the Metro Manila office market are seen to further accelerate in the second half of the year, according to property services firm Jones Lang Lasalle (JLL).

“Leasing volumes are projected to further accelerate in 2H22, as the market normalizes with a new administration, COVID-19 cases are continuously being contained, and return to the office mandates take effect,” JLL said in its Second Quarter Asia Pacific Office Digest.

“Activation of deals have been delayed due to the pandemic, and the anticipated entry of new firms are some of the other factors that may propel transactions in the coming quarters,”it said.

JLL said net absorption remained positive in the second quarter at 99,800 square meters as move-ins accelerated and outpaced move-outs.

“BPOs (business process outsourcing) continued to lead transactions with notable take-up such as a 8,400 sqm lease in Taguig City, and two transactions of 2,800 sqm and 2,000 sqm in Makati City,”JLL said.

Leases from corporate occupiers were also observed, which included a 14,600 sqm lease from a banking firm in Makati City.

The property services firm said that move-outs slowed down compared to previous quarters, easing vacancy levels.

Sizable move-outs during the period include a 3,000 sqm and a 1,100 sqm space left by BPO firms, as well as a 1,100 sqm area vacated by a corporate occupier.

JLL said rents and capital values are  expected to improve in the coming months with the anticipated uptick of leasing and investment volumes.

“The stabilizing of the economy has encouraged firms like Amdocs, LR Group and Maroonz Holdings to expand in the country,”JLL said.

The property consultancy firm said the expansion of these companies is set to generate 1,100 jobs for the BPO (business process outsourcing) industry, which would likely translate to lease transactions.

Average office rents in the second quarter remained stable and settled at P1,123 per sqm per month, a 0.2 percent contraction from the previous quarter.

“Landlords still opted to hold on to their rates to aid recovering demand, and compressions were only observed in developments with new sizable, vacated spaces,”JLL said.

Capital values grew by 1.5 percent quarter-on-quarter to P176,745 sqm, underpinned by the healthier sale demand observed in the quarter.

Take-up of office space for sale was   positive after a stagnant performance during the peak of the pandemic, as investors resumed deals.