Office news roundup: Philippines office sector recovery slower this 2024, and other headlines

For PropertyGuru’s office property news roundup, the Philippines’ office space sector is expected to experience a slower rate of improvement this year. In other headlines, office leasing by flexible space operators in India achieved a surge of 3 million square feet (msf) in Q1 2024, while Beijing’s commercial real estate market recovered partially in Q1 2024 with rents for premium office space continuing to drop even though overall activity is picking up.

Office sector recovery slower this year — Prime Philippines

The office space sector is expected to experience a slower rate of improvement this year, real estate consultancy firm Prime Philippines said in BusinessWorld.

“What we are seeing is that by 2024, this [trend] would continue to improve slightly as there are new supplies [entering] the market, possibly reaching around 80 percent to 85 percent,” Prime Philippines Chief Executive Officer and Founder Jettson “Jet” Yu said at a briefing.

The Bay area’s recovery is slow, facing significant challenges primarily due to the removal of Philippine Offshore Gaming Operators, he added.

In 2023, Bonifacio Global City had the highest occupancy rates at 89 percent, followed by Ortigas Central Business District (CBD) at 85 percent. A net take-up of 12.6 million square meters (sq.m.) was recorded by the end of the year.

According to Prime, major projects by 2024-2025, such as One Vertis Plaza in Quezon City, Cyberpark 3 in Araneta City, 378 Filinvest in Makati CBD, and others, will increase the office supply of Metro Manila to 13 million sq.m.

It also anticipates a gradual uptick in demand this year and potentially reverting to pre-pandemic numbers from 2018 to 2020, then reaching the same level by the year 2026.

India’s office leasing by flexible space operators touches 3 msf in Q1 2024: Report

While the technology sector led quarterly office leasing in India, the flexible office space segment emerged as the second-largest sector during Q1 2024, according to CBRE South Asia’s latest report titled ‘CBRE India Office Figures Q1 2024’. Total office leasing by flexible space operators stood at 3 million square feet (msf) during Q1 2024, marking a surge in activity with a 22 percent share in overall office leasing across the top nine cities.

According to the report on Housing.com, flexible space operators have emerged as a prominent force within the Indian office leasing ecosystem, consistently securing a share exceeding 15 percent in the past five years. This trend reflects an upward trajectory in the space leased by such operators and is anticipated to continue its growth. India is the fastest-growing flexible office market in the world. The sector is likely to gain further traction driven by increasing demand across diverse segments, including large enterprises, the burgeoning start-up ecosystem, and global capability centres (GCCs) establishing their research and development (R&D) operations in India. As hybrid work models become increasingly popular, the anticipated strong demand for flexible spaces will propel the sector’s impressive growth trajectory for the foreseeable future.

Commercial property: Beijing retail rents jump by most since 2019 with premium office space remaining under pressure

Beijing’s commercial real estate market recovered partially in Q1 2024 and is gearing up for further stabilisation this year as a strong rebound in consumption and policy support combine to drive demand for leasing and investment, analysts said.

In the retail market, rents in urban Beijing rose 1.3 percent quarter on quarter in the three months ended 31st March, marking the fastest growth in this segment since 2019, according to a report published by real estate services company JLL and reported in SCMP.

Meanwhile, rents in the suburban retail market jumped by 2.8 percent, which also represents the fastest growth since 2019 as well as a rebound to 2021 levels. And while rents are still nowhere near pre-pandemic levels, the outlook for the segment is generally positive, the report said.

Meanwhile, the retail vacancy rate returned to pre-pandemic levels, dropping 0.7 percentage points to 5.2 percent in urban Beijing and by 0.3 percentage points to 6.4 percent in the suburban market.

In the office segment, rents for premium space continue to drop even though overall activity is picking up.

Amid fierce competition among landlords for quality tenants, rent for grade-A office buildings in the first quarter dropped by 11.4 percent year on year and 4.6 percent compared with the previous quarter, according to JLL.

Rents for grade-A space dropped by more than those for grade-B buildings for the first time in seven quarters, according to CBRE in a report released on Tuesday.

Grade-A offices are expected to see rents decline by 7.8 percent in 2024, according to JLL.

The Property Report editors wrote this article. For more information, email: [email protected].