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Returns to pre-Covid levels of demand for retail space

With the loosening of travel restrictions and the country’s recovery from the pandemic, demand for commercial space is assisting the rise of the property market.

According to a survey released Tuesday by the real estate services business Santos Knight Frank, the commercial sector’s vacancy rate for the second quarter of 2022 was 4.6 percent or nearly pre-pandemic.

In the fourth quarter of 2019, the business vacancy rate was at 3.6 percent before the Covid-19 epidemic.

According to a statement from Santos Knight Frank, “the recovery in brick-and-mortar retail, a sector that saw many businesses closing shop during the height of pandemic lockdowns, is being attributed to the easing of travel restrictions, pent-up demand for consumption, high vaccination rates, and the return to the office (RTO).

The food and beverage industry is taking up 32.7 percent of commercial space for forthcoming businesses in Metro Manila alone, while clothes and apparel outlets are taking up 32.1 percent.

In the following two to three years under President Ferdinand Romualdez Marcos, Jr., “the Philippines’ property sector is projected to witness significant recovery as demand returns on both commercial and residential property,” it continued.

Santos Knight Frank has noticed an uptick in activity in the office market since the government’s order to register business process outsourcing (BPO) enterprises to the RTO last April.

“For many employees, the second quarter was their first time back in the office. In conjunction with that, we also observed an uptick in lease activity for the first time in a while, according to Morgan McGilvray, senior director for occupier strategy and solutions at Santos Knight Frank.

However, despite the addition of 228,500 square meters of office space in Metro Manila in the second quarter of the year, the vacancy rate between April and June 2022 has remained high at 23%.

“Finally, the Philippines is projected to experience a higher rate of employee RTO than the rate in advanced Western economies, along with India, South Korea, Singapore, and much of Asia. According to the consultant firm, RTO in the Philippines is a product of both the office culture and the requirements of the country’s BPO occupants.

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