Nearly 120,000 sq. m of new office spaces entered the Metro Manila office market in 1Q/2016. Quezon City received more than three-fourths of the new supply in the market with the completion of UP-AyalaLand Technohub Building P and Cyberpark Tower One in Araneta Center.

Sustained demand arising from the entry and expansion of outsourcing and offshoring companies led to the positive net take-up for Grade A office spaces in Metro Manila with net absorption during the first three months of the year reaching more than 90,000 sq. m. 

Overall vacancy levels in major submarkets decreased with the exception of` Makati CBD and Quezon City. During the first quarter of 2016, Metro Manila office market vacancy rate stood at 3.7%.

The positive net take-up in 1Q/2016 underpinned rents across all major submarkets. In 1Q/2016, Ortigas Center outperformed other districts with average rental rates increasing 1.4% QoQ and 5.5% YoY.

In the next few years, downward pressure on rental rates are likely to persist as recordhigh levels of upcoming supply are expected to enter the market. With the surge in new office spaces, landlords are seen to become more flexible in lease negotiations, aiming to retain existing tenants and attract new locators. 

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