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Friday, March 1, 2024

Charting a stronger course: Metro Manila office to steer clear of 20% vacancy


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Colliers continues to note deals from traditional and outsourcing firms implementing a mix of flight-to-quality and flight-to-cost measures

Leading diversified professional services and investment management company Colliers (NASDAQ, TSX: CIGI) said in a recently held market briefing that the Metro Manila office market performed better than expected compared to initial projections. “In 2023, net take-up has more than doubled compared to the previous year as transactions continue to outpace lease surrenders. Despite new supply driving its marginal increase, vacancy posted as of end-2023 has averted the 20-percent level and is forecasted to stay within the sub- 20% level in 2024,” said Kevin Jara, Colliers Director of Office Services – Tenant Representation. Colliers continues to note deals from traditional and outsourcing firms implementing a mix of flight-to-quality and flight-to-cost measures. The office market has also seen more expansions (50% of total transactions) and new entrants (10% of total transactions) in 2023. Navigating the sub-20% vacancy landscape

As of end-2023, Metro Manila office vacancy reached 19.3%, marginally higher than the 18.7% recorded in Q3 2023, driven by completion of new office buildings and lease surrenders from non-renewals and pre-terminations. Despite this increase, the posted year-end vacancy remains lower than our initial projection of 21.2%. “In 2024, vacancy is expected to reach 19.6% as we project stronger demand for office space despite low pre-commitment levels in upcoming properties and expected surrenders from pre- pandemic leases. Assuming sustained demand from key office market drivers (i.e., traditional and BPO companies), Colliers expects that the office vacancy will remain in the two-digit territory for the next five years and projects a 14.3% vacancy by end-2028,” said Jara. Net take-up exceeds forecast, to increase by 20% in 2024

Given demand continuing to outpace surrenders, net take-up or absorption reached 279,800 square meters in 2023, higher than our initial forecast of a 220,000 square meters net take-up and the 110,500 square meters recorded in 2022. “Colliers is optimistic that net absorption will sustain its momentum in 2024 as we continue to receive inquiries for new setups, expansions, and relocations within the capital region,” said Vida Samaco, Colliers Senior Manager of Office Services – Tenant Representation. “In 2024, we project net absorption to reach 336,000 square meters, with the 20% increase based on pre-pandemic, pre-POGO average annual growth rate.”


Occupiers exercise flight-to-value strategy

With the prevailing tenant-leaning market, existing occupiers continue to secure new and high- quality office spaces in primary CBDs at lower rents, as evidenced by the rollout of their expansion and relocation plans. Based on Colliers’ data, 40% of transactions with known motivations were relocations and out of these relocations, 60% have implemented flight-to- quality/value (i.e., relocations to newer, higher-grade buildings). Traditional, shared services, and third-party outsourcing companies were seen implementing this strategy in Fort Bonifacio, Makati CBD, and Ortigas CBD. Colliers encourages tenants planning to expand or relocate their operations to take advantage of newly completed office buildings in business hubs that offer rental discounts. To capture future demand, landlords with presence in better performing submarkets may consider redevelopment of aging properties and/or building more quality and green spaces, given that sustainability is now a minimum requirement for occupiers in securing spaces.

Negros Biodiversity a Focus for World Wildlife Day on 3 March


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Negros is the fourth largest in the Philippines and is known for sugarcane, white sand beaches and breathtaking national parks, such as the Balinsasayao Twin Lakes. “Funding our protected areas is a good way to prevent the extinction of the Philippine Leopard Cat, Visayan Spotted Deer and other endangered species,”

Famed for its sizzling beaches and sweet sugarcane fields, the island of Negros also hosts some of the country’s rarest wildlife. 

“The Philippine Leopard Cat (Prionailurus bengalensis), Visayan Spotted Deer (Rusa alfredi) and Visayan Warty Pig (Sus cebifrons) once roamed freely throughout the island, but have become endangered because of hunting and habitat loss,” explains Philippines Biodiversity Conservation Foundation Incorporated (PhilBio) Executive Director Lisa Paguntalan. “Now they’ve been pushed into the most remote parts of Negros, like the misty forests of Kanlaon Volcano.” 

Within a span of about 200 years, Negros lost 96% of its original forest cover. Adjacent islands such as Cebu experienced similar forest loss, driving animals such as the Cebu Warty Pig (Sus cebifrons cebifrons), Ticao Tarictic Hornbill (Penelopides panini ticaensis) and possibly the Negros Fruit Dove (Ptilinopus arcanus) to extinction. 


Negros Occidental Governor Eugenio Jose Lacson gives the thumbs up for the conservation of Negros island’s wildlife at the MOU signing held on 7 July 2023. 


Negros Oriental Governor Manuel Sagarbarria led the signing of an MOU to conserve Negros Oriental’s biodiversity last 18 September 2023. 


Visayan Spotted Deer (Rusa alfredi) are the largest of the Philippines’ deer species. Classified as endangered,
only a few hundred hold out in the remote forests and mountains of Negros. 

Visayan Warty Pigs (Sus cebifrons) are threatened by habitat loss, hunting and genetic contamination from free-range domesticated pigs. Considered critically-endangered, they are found only on the islands of Negros, Cebu, Panay, Masbate, Guimaras and Siquijor. 


“However, some of these extinct animals might still be alive,” shares Lisa, who was part of a team that helped rediscover the Philippine Bareback Fruit Bat (Dobsonia chapmani) – a species thought extinct since the 1970s – in Cebu in 2001 and Negros in 2003. 

Starting out as a programme of international conservation organization Flora & Fauna International in 1991, PhilBio was eventually registered as a foundation in 2006 and now works to conserve lesser-known endangered animals across the Philippines, including Cebu, Mindanao and Negros, which hosts notable Key Biodiversity Areas (KBAs) including the Northern Negros Natural Park, Bais Bay and Apo Island. 

To help conserve the biodiversity of Negros and sustain it through a stable flow of financing, the Biodiversity Finance Initiative of the Department of Environment and Natural Resources and United Nations Development Programme (DENR-UNDP BIOFIN) recently partnered with PhilBio and the provincial governments of Negros Occidental and Negros Oriental. 

A Memorandum of Understanding (MOU) was signed in Negros Occidental on 7 July 2023. “Our province shall continue to support biodiversity financing for the conservation and protection of the environment,” says Negros Occidental Governor Eugenio Jose Lacson. Another MOU was signed in Negros Oriental on 18 September 2023. “This agreement fortifies our conservation efforts through sustainable financial mechanisms,” says Negros Oriental Governor Manuel Sagarbarria. “These two MOUs will help find, access, combine and prepare sources of biodiversity funding, including those from national and sub-national government agencies, plus businesses,” explains BIOFIN Philippines Country Manager Anabelle Plantilla. “They should also help insert provincial biodiversity conservation programs into the plans of national government agencies, regional councils, and other relevant groups.”

“We’re glad to work with PhilBio and our two Negros LGUs through the DENR-UNDP BIOFIN. The DENR is always ready to work with the LGUs to help in the sustainable management of our Protected Areas and wildlife – not just in Negros, but nationwide," 

says DENR Assistant Secretary for International Affairs and concurrent OIC BMB Director Marcial Amaro, Jr.


More Funds Allotted for Negros Biodiversity Projects

Over the past few years, the biodiversity conservation budgets of both provinces have been rising, proving that Negrenses are serious about saving their wildlife. Crucial to the budget increase is the crafting of the Negros Island Biodiversity Strategy and Action Plan (NIBSAP). This roadmap was developed in 2018 with assistance from the DENR-UNDP BIOFIN and since then, both provinces have used the NIBSAP as a tool for biodiversity budget advocacy. 

From 2023 to 2024 alone, the biodiversity budget allocation of Negros Occidental grew from PHP297M to PHP366M. 

The annual biodiversity conservation budget of Negros Oriental grew from just PHP3M in 2018 to over PHP20M this 2024. 

These funds enabled a wide range of conservation initiatives, ranging from a wildlife field course hosted by the LGU of Negros Oriental, to the purchase of a 10-hectare plot covering seven waterfalls in Negros Occidental’s Mambukal Sanctuary for long-term protection. 

Both provinces are also promoting ecotourism to help fund the management and improvement of Negros Island’s protected areas, including the Balinsasayao Twin Lakes Natural Park, a haven for birdwatchers, Mt. Kanlaon Natural Park, the Visayas’ top mountaineering destination, plus the Tañon Strait Protected Seascape, known for whale and dolphin watching safaris. 

“Conservation isn’t politically delineated,” adds Lisa. “Birds, bats and other wildlife rarely stay within political boundaries so they deserve to be given ‘corridors’ or interlinked habitats which are protected and properly managed. We hope this can be done throughout Negros within this decade.” 

Developing finance solutions for biodiversity conservation in Negros Island is just one of the many ways that DENR-UNDP BIOFIN is supporting global biodiversity conservation by mainstreaming conservation funding not only at the national level, but also at the local level. 

Since 2014, BIOFIN has been working with the DENR and many allies to finance the Philippine Biodiversity Strategy and Action Plan (PBSAP), the country’s roadmap to conserving its biodiversity. Its current target is to narrow down the national budget gap for environmental projects, estimated at PHP19 billion yearly. 

Active in 41 countries, BIOFIN works to close the financing gap for the conservation and sustainable use of the planet’s biological diversity by generating revenues, realigning and avoiding unsustainable expenses and improving biodiversity management efforts.

“We envision a future where the biodiversity of Negros and other Philippine islands not just thrives, but regularly attracts droves of eco-tourists. This World Wildlife Day, let’s renew our commitment to protect Philippine biodiversity by highlighting the importance of investing in the environment,” concludes UNDP Resident Representative Dr. Selva Ramachandran. 


About the Biodiversity Finance Initiative (BIOFIN)

BIOFIN was launched in 2012 and seeks to address the biodiversity finance challenge in a comprehensive manner – building a sound business case for increased investments in the management of ecosystems and biodiversity, with a particular focus on the needs and transformational opportunities at the national level. For more information: 

https://www.biofin.org/ About the United Nations Development Programme (UNDP) 

UNDP partners with people at all levels of society to help build nations that can withstand crisis, and drive and sustain the kind of growth that improves the quality of life for everyone. 

On the ground in 177 countries and territories, we offer global perspective and local insight to help empower lives and build resilient nations. 

In the Philippines, UNDP fosters human development for peace and prosperity. Working with central and local governments as well as civil society, and building on global best practices, UNDP strengthens capacities of women, men and institutions to empower them to achieve the Sustainable Development Goals (SDG) and the objectives of the Philippine Development Plan. Through advocacy and development projects, with a special focus on vulnerable groups, UNDP works to ensure a better life for the Filipino people. Learn more at ph.undp.org or follow at @UNDPPH.

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