Collier’s Review: Ortigas Center’s flourishing prominence
Metro Manila definitely benefits from the continued expansion of the Philippine economy.
The country was the fastest growing economy in Southeast Asia last year and projections are looking good. The personal consumption-driven Philippine economy is likely to record one of the fastest gross domestic product (GDP) growth rates in Southeast Asia this year.
Within the capital region, local and foreign businesses continue to gravitate towards Ortigas Center, which is seen to play a pivotal role in the country’s economic expansion postpandemic. In our view, this should partly be facilitated by the government’s commitment to improve the country’s infrastructure network.
The continued development, expansion, and modernization of railways, subways, and bridges should contribute to a more dynamic Ortigas Center and should enable the business district to attract more big-ticket, job-generating investments.
Game-changing infrastructure
Among the crucial public projects that will positively benefit Ortigas Center is the 1.48-km BGC-Ortigas Link Bridge that became operational in October 2021. The P1.8 billion project has facilitated the seamless commute of employees between the business hubs of Fort Bonifacio and Ortigas.
As a result, BGC and Ortigas are now two primary options of businesses planning to expand or locate outside the Makati central business district (CBD).
The Metro Manila Subway is a 33-km, P489 billion subway rail line that aims to enhance connectivity in Metro Manila. It will have 17 stations from Valenzuela City to NAIA Terminal 3 and the Food Terminal Inc. This massive infrastructure will also be connected to the North-South Commuter Railway, allowing passengers to travel all the way to Calamba in Laguna.
Meanwhile, the MRT-3 rehabilitation covers a general overhaul of 72 Light Rail vehicles, rail replacement, upgrade of signaling system, CCTV and repair of escalators and elevators to increase rail reliability and improve passenger commuting experience.
Its second phase involves improving the line’s signaling, power supply, communications systems, and depot and station equipment. The project is estimated to be completed in 2025.
High quality, sustainable offices
Colliers Philippines’ office services team has seen significant relocation and consolidation deals from traditional and outsourcing locators.
Over the past few years, we have recorded sizable transactions which are flight-to-quality and flight-to-value movements as the Metro Manila office market continues to favor tenants. Spaces are still available in newly-completed buildings with green features for tenants to align their ESG initiatives with.
This is one of the major reasons why we see landlords actively engaging tenants and offering attractive deal structures while implementing building improvements to achieve optimal levels of occupancy.
Ortigas Center is definitely one business district that currently houses not just new office buildings but also towers that offer green and sustainable features to attract demand from discerning tenants such as shared service firms, healthcare companies and other multinational occupants.
Diverse office space demand
Similar to the trend we are seeing for the entire Metro Manila market, office space demand in Ortigas Center remains diversified.
Firms providing outsourcing, flexible workspaces, logistics and consultancy services have taken up space over the past 12 months. Colliers is also in talks with large multinational companies (MNCs) planning to occupy massive space in Ortigas Center.
As of Q1 2024, Ortigas Center recorded a vacancy of 14 percent, below the Metro Manila average of 19 percent. This indicates that the business hub records sustained office leasing despite rising vacancies in other business districts.
From 2024 to 2026, we project the annual completion of about 27,000 sqm of new office space in Ortigas Center. From 2022 to 2023, the business district recorded annual net office take-up of about 40,000 sqm. Given this scenario, we project vacancy in Ortigas Center to remain manageable in the near term.
Capturing expats’ requirements
With new, high quality, and expansive office spaces, Colliers Philippines believes that Ortigas Center is likely to attract large MNCs as tenants. The expected influx of expatriates (including those working for multilateral aid agencies and consular offices) and local executives of large Filipino corporations will be crucial in driving demand for upscale to luxury residential units.
Discerning local investors are also likely to add Ortigas Center as one of their residential options, given the business hub’s stock of upscale and luxury residential projects.
In our view, Ortigas Center will remain a hub for upscale and luxury condominium projects. It also has a massive upside potential especially upon the completion of the Manila subway, which will have two stations in Ortigas Center. The completion of this public project should likewise help raise the rental prospects of condominium units within Ortigas CBD.
New supply in the Ortigas pipeline
From 2024 to 2026, we expect the delivery of 5,500 condominium units in Ortigas Center. By end 2026, Ortigas’ condominium stock will likely reach 25,300 units, up 28 percent from 2023.
Ortigas also remains a submarket with favorable residential vacancy. As of Q1 2024, Ortigas Center posted a vacancy of 6.2 percent, lower compared to other major CBDs in Metro Manila and better compared to the Metro Manila-wide vacancy of 17 percent.
With new residential projects scheduled for completion over the next 12 to 36 months, investors and end-users should look forward to more interesting developments in the area.
Given these exciting new developments, astute end-users and investors should constantly be on the lookout for big cuts, round-the-clock security, well-equipped gyms, ample parking space, quality interiors, and finishes, and other features that upscale and luxury units offer.
What’s also interesting for Ortigas Center is the presence of massive malls that cater to the retail requirements of employees, students, and residents. These retail centers offer a myriad of local and foreign shops that cater to shoppers’ constantly evolving preferences.
Expect new and exciting office, residential, retail, and hotel projects in Ortigas Center in the years to come. These developments will definitely redefine the Ortigas skyline.
