Manila office rent 3rd highest in Southeast Asia
Manila has emerged as the third most expensive when it comes to post-pandemic office in Southeast Asia, according to Cushman & Wakefield’s 2023 Asia Pacific Office Fit Out Cost Guide.
Haidee Lim, director and head of the Project and Development Services at Cushman & Wakefield Philippines said a lot of clients are heavily investing in technology to support a collaborative workplace due to the increased use of hybrid working.
“Whenever possible we would source for products that are locally made or readily available, however as most of the items are still being procured from overseas, the selection available locally is limited,” she said.
Cushman & Wakefield director and head of research Claro Cordero said the return-to-office schemes and the growing importance of “future-proofing” such as environment, social and governance (ESG)) would lead to heightened demand for more smart, high-tech office spaces.
“The high-spec workspaces both for large occupiers and small- to medium- enterprises/companies due to increased rate of digitalization in the Philippines will further drive the flight-to-quality real estate strategy as occupiers satisfy the need for more elaborate workspace designs despite economic-induced elevated levels of fit out costs,” Cordero said.
According to the Cushman & Wakefield, persistent inflation, tight labor markets, and ongoing supply chain delays have increased average fit out costs across Asia Pacific.
The report said major occupiers are absorbing the higher spend in their quest to improve return-to-office rates.
Dominic Brown, head of international research and co-author of the report, said that while fit out costs were up across the region by an average of 18 percent in local currency or seven percent in US dollar terms, there were early signs of easing pressure.
“Although costs remain above historic levels, supply chain stress has eased slightly along with the cost of shipping, and declines from the commodities pricing peak in 2022 have reduced pressure on energy and fuel pricing. Inflation, while still high, is believed in many economies to have either peaked or to be close to peak,” Brown said.
The report showed that North Asia markets remained the most expensive to fit out in a ‘Collaborative Hybrid’ style, with only Canberra, Australia also appearing among the top five. Within the top 10, Hong Kong was the only market outside of North Asia and Australia/New Zealand to feature.
Cushman & Wakefield’s Asia Pacific head of Project & Development Services Tom Gibson said despite higher costs and constraints on capital expenditure, the conversation with occupiers remained focused on the changing working environment.