THE regional office market across the Philippines saw significant development in the first half of 2024, with notable growth in key areas such as Iloilo and Cebu, according to property research firm KMC Savills.
According to its latest report, while several cities are riding the wave of progress, Metro Cebu is set to emerge as a leader in office space expansion, despite current slowdowns due to limited supply.
The Visayas office market, driven by Iloilo, experienced a significant boost with the addition of 105,200 square meters of office space.
However, Cebu is expected to surpass this growth by the end of 2025, with an anticipated 143,800 square meters of new office supply.
The firm said this upcoming increase will position Cebu as a major hub for business expansions, particularly for firms looking to tap into the region’s growing business environment.
While Bacolod and Davao have also seen positive momentum in their office markets, Metro Cebu faced challenges in the first half 2024.
Office space absorption in Metro Cebu slowed, with a net take-up of 39,000 square meters, down from the previous half of 2023.
However, the demand for office space in Cebu remains robust, driving rental rate increases.
Metro Cebu recorded the largest rental hike in the region, with prices rising by P7.5, bringing the average rate to P552.7 per square meter. This increase was fueled by limited supply and ongoing demand from businesses.
In comparison, KMC said cities like Iloilo and Bacolod experienced declines in rental rates, reflecting higher vacancy levels.
Iloilo’s rental rates dropped by 8.68 percent year-on-year to P574.4 per square meter, and the city’s vacancy rate surged to 28 percent. With the upcoming addition of 106,000 square meters of office space, KMC said Iloilo’s rental rates are expected to go down.
However, this influx of new space is anticipated to attract more tenants, particularly those seeking modern office environments.
Moreover, KMC said Cebu’s office market is poised for a resurgence as new developments come online.
By 2025, Cebu’s additional office supply is expected to drive more transactions and position the city as a key player in the country’s office market.
This expansion, coupled with the rising rental rates, underscores Cebu’s appeal for business growth and investment, the firm said. / KOC