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ENTER MARKET NAME OFFICE REPORT

3Q10
BEAT ON THE STREET
ECONOMY
As foreseen by most experts, 2010 is now proving to be a better year. The “The next quarter will be crucial for
real GDP during the second quarter registered an impressive 7.9% growth Companies looking to take on new space and
rate from the first quarter’s 7.3%. The IMF declared a GDP growth forecast consider relocating to more favorable
of 7% for 2010. This figure exceeds the government’s forecast of 5% to 6% premises at current bottomed rates. Lease
for 2010 (the government’s forecast for 2011 is 7% to 8%). Inflation rate on rates will start moving upwards as developers
the other hand stood at 3.5% this September (the lowest in ten months) do not have additional supply for 2011.” -
which might be an indication for the Bangko Sentral ng Pilipinas (BSP) to Josemari Cuervo, President & CEO; Cuervo
keep its rates at its current levels. Fiscal policy is still perceived to be Far East in association with Cushman &
Wakefield.
crucial to balance sustaining the fragile recovery pace and keeping in
check the budget deficit. Despite the recent strength of the Peso with its
ECONOMIC INDICATORS
sharp moves against the dollar, representing its strongest in two years, the
BSP indicated no plans of putting up capital controls or policy interventions 2009 2010F 2011F
claiming that inflows are still manageable. OFW Remittances are expected
GDP Growth 1.13% 5-6% 7-8%
to grow by 8% in 2010. Investors in the stock market are also advised
caution despite the recent significant gains of the bourse since some CPI Growth 3.4% 3-5% 3.5-5.5%
experts perceive the market to be in an “irrational – exuberance phase.”
BPOs on the other hand remained a driving force in the economy, in fact Unemployment 7.5% 7.5% 7.3%
according to the Contact Center Association of the Philippines, the BPO Employment 92.5% 92.5% 92.7%
industry would grow by 23% in terms of revenue in 2010 alone. Growth

Source: NSCB, NSO, NEDA, CFEI


OVERVIEW
The market has seen a general stabilizing period in 2010. Lease rates in MARKET FORECAST
most submarkets have remained at its current low indicating further that the
market will tend to remain at the bottom for the remaining part of 2010. ABSORPTON: This trend of low
Vacancy rates have also remained significant enough as new supply is still absorption rates as a lag effect of the
recent world economic slump, will likely
being shored up by developers. continue for the remaining part of the
year.
Absorption or the sheer number of transactions in the office market may be
observed to have diminished compared to pre-world economic slump CONSTRUCTION: There are a number
of notable office projects in 2009 and
levels. Investor confidence have improved but the market is still likely to
2010. Continuous shoring up of new
remain at the bottom for the remaining part of the year 2010. In fact, major supply, however diminished, is likely to
developers are still bullish in initiating mixed-used developments, notable continue despite fragile world economy.
examples of which are the North and South Bonifacios, and even Nuvali.
These new developments will likely sustain future demand in the office RENTAL RATES: Lease rates are likely
to remain stable for 2010. Gradual
market. increases may occur come 2011.

OUTLOOK GRADE A RENTAL VS. VACANCY


The Philippine Economy managed to avoid recession and has even turned RATES
around with impressive growth, as shown in its recent 3rd quarter Real GDP
growth of 7.9%. Although the lag effects of the recent world economic
slump will likely maintain the status quo, being at the bottom for the
remaining part of 2010; 2011 however is a different story. 2011 is expected
to witness the commencement of general increases in lease rates. These
expected increases are mainly attributed to the slowdown or even lack of
developers shoring up new supply. Although unlikely to return to pre-crisis
levels rapidly, increases in 2011 and 2012 will largely be seen. This will
also put pressure on vacancy rates, thereby slowly but effectively reducing
vacancies in the different business districts. It is expected that the market
will begin the gradual shift from being tenant-favorable to neutral.
1 ENTER MARKET NAME OFFICE REPORT 3Q10
ENTER MARKET NAME OFFICE REPORT 3Q10

MARKET / SUBMARKET STATISTICS


OVERA LL YTD YTD
CONSTRUCTIO
VACA NCY UNDER OVERA LL GRADE A RENTA L RA TE*
N
INVENTORY CONSTRUCTION COM PLETIONS A BSORP TION Lo cal
M A RKET/ SUB M A RKET RA TE Euro US $
(Sq.m.) (Sq.m.) (Sq.m.) (Sq.m.) Currency*
Ortigas Center 1,135,000 3.5% 450 7.41 10.36
Makati CBD 2,718,097 8.75% 66,000 850 14.00 19.58
Fort Bonifacio 1,606,481 5.5% 31,600 56,000 600 9.88 13.82
Filinvest Corporate 700,000 23.0% 450 7.41 10.36

*Php/psm/mth
Exchange Rate:
US$ = Php43.4299
EUR = Php60.7072
Source: CFEI

MARKET HIGHLIGHTS
SIGNIFICANT 3Q10 NEW LEASE TRANSACTIONS
BUILDING SUBM ARKET TENANT SQUARE M ETERS BLDG CLASS

World Finance Plaza Fort Bonifacio HP 18,010 A


SIGNIFICANT 3Q10 SALE TRANSACTIONS
BUILDING SUBM ARKET Buyer SQUARE M ETERS PURCHASE PRICE

N/ A
SIGNIFICANT 3Q10 CONSTRUCTION COMPLETIONS
BUILDING SUBM ARKET M AJOR TENANT SQUARE M ETERS COM PLETION DATE

World Finance Plaza Fort Bonifacio N/ A 24,254 3Q 10


One Global Place Quezon City N/ A 34,334 3Q 10
SIGNIFICANT PROJECTS UNDER CONSTRUCTION/ RENOVATION
BUILDING SUBM ARKET M AJOR TENANT SQUARE M ETERS COM PLETION DATE

W Office Fort Bonifacio N/ A 9,108 3Q 10


GA Corporate Center Quezon City N/ A 10,000 3Q 10
Sun Life Center Fort Bonifacio N/ A 22,500 2Q 11
Zuellig Building Makati CBD N/ A 66,000 3Q 12

FOR INDUSTRY-LEADING INTELLIGENCE TO SUPPORT YOUR REAL ESTATE AND BUSINESS DECISIONS, GO TO CUSHMAN & WAKEFIELD’S KNOWLEDGE CENTER AT: www.cushmanwakefield.com/knowledge
*Market terms & definitions based on BOMA and NAIOP standards.

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