PROPERTY consultant Colliers International Philippines sees Metro Cebu office vacancy rising to 18 percent in 2021 as more office spaces are being vacated by outsourcing firms and providers of English as a Second Language (ESL) services.
In its latest market outlook, Colliers said these firms are closing or downsizing space requirements and are implementing split operations, such as work-from-home arrangements or are losing their online operations because of travel restrictions brought by the coronavirus pandemic.
Despite this, Colliers sees a faster pace of recovery in major hubs such as Cebu IT Park and Cebu Business Park once market sentiment improves.
“Colliers sees new office completions in 2021 for Metro Cebu rising by 206 percent to 114,100 square meters compared to our projected 37,300 square meters. These include office buildings that were deferred in 2020,” the research firm said.
Completion of some office buildings will likely be delayed to the second half of 2021 to 2022.
“From our initial projection of 100,300 square meters of annual new supply from 2021 to 2022, we now see the delivery of about 93,600 square meters,” Colliers said.
The firm also projected a downward pressure on rents to continue until 2021.
“In our view, rates in key business districts such as Cebu IT and Business parks and their fringe areas are likely to post the fastest pace of recovery as we see occupants, particularly outsourcing firms, gravitating towards these business hubs,” said Colliers.
Moreover, Colliers is optimistic that Cebu will get a good share of office market leases once the economy fully recovers. It noted that based on the results of the Tholons Services Globalization Index 2020, Cebu is the 15th most competitive outsourcing destination in the world.
Cebu is one of only two Philippine cities, along with Metro Manila, that made it to the Top 100.
“This should sustain Metro Cebu’s competitiveness and viability as outsourcing firms continue to scout for locations outside Metro Manila. This should help the region attract more outsourcing locators once market sentiments improve and contribute to a stronger pace of office leasing beyond 2021,” Colliers said. (KOC)