by Joey Bondoc
From major central business districts (CBDS) such as Makati and Ortigas, the need for more office, residential, and retail projects compelled developers to look for available land. As a result, other business hubs in the country’s capital emerged such as the Manila Bay Area.
Due to brisk private construction over the past 30+ years, developers have started to acquire reclaimed land. Land values in reclaimed areas have significantly increased due to the growing appetite for office, residential, and retail projects. Colliers Philippines believes that the viability of mixed-use projects in the Bay Area is strengthened by the mix of completed and proposed public infrastructure projects nearby including the NAIA Expressway, Light Rail Transit (LRT) 1 Cavite Extension, Sangley Airport, and Mega Manila and Makati subway projects.
Both BPO and non-BPO firms have been opening shop in the burgeoning business hub due to its proximity to the airport and ease of access to other business districts. Even government agencies looking for quality and expansive office space have started to locate in the area. The entry of offshore gaming firms from China has raised the area’s attractiveness as a business district, resulting in tight office vacancy. In 2019, the Bay Area recorded an office vacancy of 0.4%, one of the lowest in Metro Manila.
Apart from outsourcing firms, government agencies, and offshore gaming companies, traditional companies engaged in logistics, advertising, construction, online shopping, and consultancy have aggressively been expanding on the back of a 6.0% to 6.5% annual economic growth. We see a sustained economic growth over the next three years and this should help sustain occupants’ demand for office space.
In our opinion, the Bay Area is likely to remain a preferred location for these firms’ expansion. This is supported by a health supply pipeline, with Colliers Philippines projecting the district’s gross leasable area (GLA) to reach 1.37 million sq metres by end-2022.
From 2020 to 2022, we see the delivery of almost 190,000 sq metres of new supply per annum. With strong interest from various office demand drivers, Colliers Philippines sees robust leasing activties in the thriving business district in the next three years.
About the Author
Joey Bondoc is the Senior Manager for Research of Colliers International Philippines.