Despite registering a slight dip in occupancy in the first quarter, the country’s industrial market continues to be active and resilient amid global uncertainty and geopolitical tension, according to local commercial real estate consultancy Prime Philippines.
This was shared by Prime Philippines Vice President for Industrial Tenant Representation Joy Rosario in a media briefing in Mandaluyong City last week.
“What we’re seeing today is not a slowdown; it’s rather a change in direction of occupiers to position themselves on how they will expand, operate, and position strategically across other countries,” Rosario said.
She emphasized that warehouse supply continues to grow steadily at around 1.8% annually, highlighting that the growth is no longer concentrated in Metro Manila, Bulacan, and Laguna.
“But what we’re seeing is that they are now growing and actively adding supply across emerging hubs such as Tarlac, Batangas, Western Cebu, Bicol, and parts of Mindanao as companies continue to decentralize their operations and strengthen regional distribution networks,” Rosario said.
In contrast, the Prime Philippines official reported that occupancy in the first quarter of the year softened to 96.9% from a peak of 98% last year. Rosario attributed the slight dip to the addition of new supply in the market and its slower absorption.
For the first quarter of the year, nationwide industrial demand registered at approximately 115,500 square meters. Data from Prime Philippines showed that the transportation and storage sectors accounted for 45 percent to 48 percent of the industrial demand in the first quarter, while the manufacturing sector had an 18 percent to 20 percent share of the demand.
Despite declining occupancies, Prime Philippines said that industrial lease rates remained stable in the first quarter. However, the consultancy noted that the consequences of the Iran War are pushing lessors to consider increasing lease rates as costs increase.
“Lease rates remained generally stable quarter on quarter, and that stability itself is already a significant story, considering rising construction costs, fuel prices, and logistic overhead,” Rosario said.
Moreover, Rosario expressed a cautiously optimistic outlook on the Philippine industrial market moving forward.
“We expect continued industrial expansion supported by the logistics, manufacturing, and, of course, our transportation [sectors]. We also see regional distribution expansion when it comes to demand, [in areas] such as Cagayan de Oro, upper north in Zambales, and La Union,” Rosario said.
By the end of the year, Prime Philippines projects nationwide industrial supply to grow by approximately 1.3 percent to 1.5 percent.
“Overall, despite this geopolitical tension and economic uncertainty, the Philippine industrial market remains fundamentally resilient. Companies are still expanding. Regional industrialization continues to gain momentum. The challenge today is no longer simply finding warehouse space; it’s actually finding the right infrastructure based on the operation of the client,” Rosario said, emphasizing optimism for the long-term growth of the industrial sector.
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