Office: Overall Grade ‘A’ and Prime office vacancy in Metro Manila remains steady at 16.83% by end-Q3 2023, a 6-bps decline QoQ from the reported vacancy of 16.90% in Q2 2023 and a 72-bps increase YoY from the reported 16.12% vacancy in Q3 2022. The return of office space by several occupiers is still prevalent in several submarkets in Metro Manila. Nonetheless, positive absorption figures are recorded overall with roughly 38,000 sqm net absorption in Q3 2023, bringing the YTD net absorption to roughly 0.13 million sq.m. The positive absorption figures are brought on by several occupiers that have relocated or consolidated their office spaces in one location to take advantage of the prevailing high vacancies.
Investment: Estimated average office (gross) rental yields in Q3 2023 remained unchanged from its Q2 2023 level at 6.90%. Year-on-year (YoY), however, the rental yields increased by about 70 bps from its level in Q3 2022. C&W Research estimates rental yields to remain unchanged in the short-term, even as the Bangko Sentral ng Pilipinas (BSP) decided to take off-cycle hike in the target reverse repurchase rate in October 2023 to further address inflation concerns.
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