CREATE MORE bill to further raise vacancy rates in Manila
MANILA, PHILIPPINES — Real estate services firm Cushman & Wakefield said that Metro Manila could face increased vacancy rates in prime office buildings this year due to the pending CREATE MORE bill.
The bill — filed within the House of Representatives to amend the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Law — would permit Information Technology And Business Process Management (IT-BPM) companies to retain fiscal incentives while operating a more flexible work arrangement.
The bill’s approval could affect the local office space market because the IT-BPM industry is Metro Manila’s largest office space occupier.
Cushman & Wakefield Director and Head of Tenant Advisory Group Tetet Castro said that the bill, coupled with the large volume of office space expected to be completed in the first half of 2024, would bring more vacancies in the city.
Director and Head of Research Claro Cordero Jr. added that uncertainty on remote work policies could further stall IT-BPM expansion plans that stimulate office space absorption in the local market.
Cushman & Wakefield’s latest office market report revealed that the prime office vacancy rate in Metro Manila is at 16.3% in Q4 2023, with the average asking rent declining by 1.8% to P1,023 per square meter (sq.m.) per month.
Over 93,000 sq.m. of office space has also been added by the end of Q4 2023, bringing the overall stock of Prime and Grade ‘A’ office space in Metro Manila to roughly 9.5 million sq.m.
Cordero also noted that the return of global office space demand to 2019 levels is still far from fruition due to higher inflation rates.
Nonetheless, Cushman & Wakefield forecasts a 2024 rebound in demand to over 300,000 sq.m., driven by the IT-BPM sector. New supply is also seen moderating to 180,000 sqm per year over the next five years, 25% below past builds.
