Additional supply to boost Cebu office market by H2

CEBU, Philippines — Cebu's office market is expected to get additional supply in the second half of this year amid the rising demand from both outsourcing and traditional tenants.

For the second half, international realtor Colliers International sees the delivery of nearly 30,000 sq m of new leasable office space.   Megaworld is set to complete its Pacific World Tower while Premiere Diamond Developers is due to deliver its HM Tower within the period.

Cebu’s office stock reached 960,000 sq m of gross leasable area (GLA) as of end-2017. The figure is four times larger than Metro Cebu’s stock 10 years ago.

As of second quarter 2018, Metro Cebu’s office stock reached 1.01 million sq m following the completion of three new buildings – Mabuhay Tower 1 and Filinvest Cebu Cyberzone Tower 2 in Cebu IT Park and Tech Tower in Cebu Business Park.

The new towers were developed by Filinvest Land, Enrison, and Cebu Holdings. The three buildings delivered a combined 53,000 sq m of new leasable office space.  Colliers sees Cebu's office stock reaching 1.04 million sq m before end-2018. This is more than double Metro Cebu’s office stock in 2011.

Both national and local developers are cashing in on the rising demand from both outsourcing and non-outsourcing tenants.

The Canadian real estate consulting firm expects Cebu Business Park and IT Park to continue to command the highest lease rates across Metro Cebu.

In second quarter, Cebu IT Park recorded the fastest rise in office lease rates – at 11 percent to 13 percent.

"We project average lease rates in these sub-markets to grow between 3 percent and 5 percent annually from 2019 to 2021. We still see upward pressure in rent given the strong demand in these sub-locations. Lease rates in other districts should grow at a more conservative 2 percent to 3 percent per annum from 2019 to 2021," the company said.

“Overall, Colliers believes that Metro Cebu’s competitiveness as a desired BPO investment hub will be sustained as it serves as the gateway to the Visayas Islands. This is complemented by the completion of the new terminal of Mactan-Cebu International Airport. Aside from being a manufacturing base, its economy is being propelled by the BPO industry.  Both sectors are major contributors to office space take up in Metro Cebu,” said Dom Fredrick Andaya, the company's office services director.

“Expatriates also prefer Cebu because of its beach resorts and other tourist destinations. Lastly, Metro Cebu has been enticing foreign and local investors as businessmen continue to enjoy the comforts of an urban landscape balanced with natural attractions,” Andaya stressed. (FREEMAN)