Office rental rates to plunge as vacancies rise up further

CEBU, Philippines — As vacancy of office and commercial spaces is seen to rise up some more in 2021, Cebu rental rates is also forecasted to dive further.

A market outlook conducted by Colliers International Philippines, which made focus on Cebu indicated that in 2020, rents declined by five percent due to softer demand and rising vacancy.

This year, Colliers expect the trend to continue and rents to go down further as vacancy is also seen to rise some more.

“We project a downward pressure on rents even beyond 2020 as we see vacancy rising to 18 percent in 2021,” the market forecast indicated.

New office completions in 2020 for Metro Cebu dropped by 81 percent to 37,300 sq metres (401,300 sq feet) compared to its initial forecast of 194,800 sq metres (2.1 million sq feet).

New supply should pick up in 2021 which should include office buildings that were deferred in 2020.

Meanwhile, vacancy was up 13 percent in 2020. The property analyst and consultancy firm projects estimated that vacancy rose to 12.8 percent in 2020 from 11.6 percent in 2019.

Vacancies across major business districts such as Mactan Newtown have been rising.

Despite this, Colliers projects a faster pace of recovery in major hubs such as Cebu IT and Business Parks once market sentiment improves.

Cebu City’s rental rates stand around P663 per square meter per month on average.