The growing economy and government’s push to boost tourism has led real estate developers to increase inventories for more office space as well as rapidly expand the number of hotel rooms they are building.
In a press briefing, global real estate services firm Jones Lang LaSalle Leechiu’s project leasing director Sheila Lobien said the growth in office space is no longer limited to demand from Business Process Outsourcing firms (BPOs).
She noted that multinationals and other local companies are now also driving demand for office space in the Philippines and setting new records, indicating unprecedented business confidence.
Lobien said that, from January to November 2012 demand for office space rose to 425,000 sqm., and may rise even further by year-end. This is at least 18 percent more than the annual average demand of 360,000 sqm. recorded in 2011.
Non-BPOs consisting of multinational and local companies accounted for 100,000 sqm. or 25 percent of current demand.
“Even before preferred office buildings are completed, companies are committing to take up space, indicating strong optimism and heightened business activity projected by the leading real estate consultancy for 2013,” Lobien said.
Pre-commitments are backed up by signed lease agreements between parties, and advanced rent and security deposits are paid. Lobien pointed out pre-commitments more than doubled in January to November 2012 as compared to the same period in the year before.
“In 11 months of 2011, we recorded pre-commitments of 68,358 sqm.,” said Lobien adding that, “in 2012, the figure over the same period shot up to 175,922 sqm.” JLLL studies also noted that a number of companies pre-committed to office space that would be completed as far forward as 2014.
Meanwhile, JLLL associate director for markets Phillip Anonuevo said the massive entertainment district development in the Bay Area has provided impetus to tourism development.
He noted that last May, JLLL tracked 10,536 hotel rooms in the pipeline from 2011 to 2016. An additional 5,000 hotel rooms has since been added to the figure in just six months. “Investment in the hotels and hospitality real estate asset class is experiencing record growth,” he said. “In addition, commercial properties such as Aseana One in the same district have become an attractive destination for firms seeking to do business in the proximity of the entertainment district.”
In the office sector, companies like Coca Cola and Aboitiz Group are bracing for expansion and moving to new corporate space in Bonifacio Global City. Anonuevo notes that buildings in this highly preferred business district like Net Lima and NAC were fully leased out even before building completion.
(Story courtesy of James A. Loyola of the Manila Bulletin)