Metro Manila office landlords cut rents to keep tenants
Office landlords in Metro Manila have been forced to cut rents and offer unprecedented rental concessions to keep their corporate tenants, according to research conducted by property consulting firm KMC Savills.
During an interview with Inquirer, KMC Savills managing director Michael McCullough said that office vacancy due to the pandemic had resulted in a 15 to 20% decrease in rental rates.
McCullough added that there was an obvious shift from dense offices to remote working across the country. Without the presence of new tenants, there will be a supply-demand imbalance keeping the “leasing conditions in the occupiers’ favor.”
Property landlords had to adjust their office rates earlier this year when the government implemented strict lockdown protocols to curb the spread of the COVID-19 virus.
KMC Savills is projecting about one million sq.m. of grade A office space in the capital region would become vacant in the coming years. This may result in a record-high 20% vacancy rate in 2022, 15% higher than the current figures.
