THE demand in Cebu’s office sector has continued to recover.
Real estate service agency KMC Savills has reported that Cebu saw a drastic increase in occupancies as of the third quarter of 2022 as the vacancy rate fell to 21.9 percent from 25.1 percent last quarter.
In its latest report on Cebu’s office sector, KMC noted that Cebu Business Park (CBP), the premier business district in Cebu City, accounted for almost half of net absorption with 17,500 square meters.
It also noted that Cebu fringe – which refers to office buildings located outside the main business districts – was also able to improve its position to a vacancy rate of 27.9 percent, a drop of 6 percent from second quarter of 2022.
“There was no movement in Cebu IT Park after a spike in take-up last quarter,” the property agency said in its report.
KMC further reported that landlords in Cebu have been very aggressive in attracting tenants in third quarter as average rents fell by 6.6 percent year on year, the largest drop since 2010.
The Cebu fringe saw the heaviest losses with average rates falling by 9.9 percent year on year. The other two submarkets were not spared with Cebu IT Park dipping below P600 per square meter per month.
Currently, the average net rental rate for Grade A Office in Cebu is P537.6 per square meter, with Cebu IT Park demanding the highest rate at P587.8 per sqm, followed by CBP (P550 per sqm) and Cebu fringe (P463.5 per sqm).
“We have criticized landlords in Metro Manila for being immovable with their rental rates despite historically high vacancies. Cebu landlords have been more rational and have benefited from the reinvigorated demand of the IT-BPM sector,” KMC said.
The industry is expected to employ an additional million with half of the new head count outside of Metro Manila.
“Cebu is well positioned for this new direction by the industry, but there will still be some rivalry from the markets of Iloilo and Bacolod in the Visayas. As such, keeping rents and quality competitive should be paramount for Cebu landlords,” the property consultancy firm further noted.