Office location decisions considering connectivity, talent pool, innovation seen to impact leasing activity in 2023
News release
08 March 2023
Metro Cebu office leasing sustained despite headwinds, Metro Manila surges 67%
“The office leasing market has been relatively stable despite headwinds,” said Janlo de los Reyes, JLL Philippines’ Head of Research and Strategic Consulting.
Gross leasing volumes in Metro Manila totals 669,000 sqm in 2022, which is 67% higher than the 2021 total of 401,000 sqm. Meanwhile, leasing activities in Metro Cebu are sustained despite headwinds, with 43,664 sqm in the fourth quarter from 41,853 sqm in the third quarter of 2022.
As of the fourth quarter of 2022, corporates (51.5%) outpaced offshoring & outsourcing (O&O) demand (44.8%) in Metro Manila, with media (31%) and banking (24%) occupiers accounting for most of the corporate occupiers. From a year-to-date perspective, however, O&Os still led transaction volumes (65.2%, versus corporate occupiers at 28.6%). The sudden shift in the final quarter may be attributed to occupiers’ holding off decisions on transfers relative to incentives in December 2022. In Metro Cebu, however, O&O continued to lead transactions (87.0%), followed by flexible workspace (13.0%).
Rightsizing among occupiers continued, with 129,949 sqm of released space in Metro Manila by the fourth quarter of 2022. In relation to this, Metro Manila vacancy rose behind weaker leasing demand and new supply. In Metro Cebu, however, vacancy continued to decline to 17.8%.
Rents in Metro Manila also remained soft, and the gap between headline and transacted rents continue to narrow, closing at 4.3% in the fourth quarter (from 5.9% in the third quarter) or 2022.
“There is also supply pressure from incoming stock across sectors in Metro Manila and Metro Cebu,” says de los Reyes. The Metro Manila office sector is expecting around 1.2 million sqm of incoming stock until 2025, while Metro Cebu may have an additional 194,700 sqm within the same time frame.
Weighing in on foreseeable leasing activity, Lizanne Tan, JLL Philippines’ Head of Office Leasing Advisory, says “The future of work will impact office leasing activity. Hybrid is now a non-negotiable element of the workplace ecosystem.” Additionally, she says that location decisions will gravitate towards places where people can socialize, shop, live, work and eat, and that tenants will prioritize markets with a strong talent pool to accelerate innovation.
About JLL
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