David E. 2m 549 #officespace
The views of this article are the perspective of the author and may not be reflective of Confessions of the Professions.
Prime real properties, such as those at the heart of Metro Manila, are among the most expensive ones in the Philippines. Offices are concentrated in this area, and it has been predicted that more will be built by next year.
In fact, office rental rates in Metro Manila has increased by 12.5% (on average) during the third quarter of 2019. The demand has been increasing due to the rise of Philippine Offshore Gaming Operators (POGO), IT companies, and other industries such as financial services.
Ortigas Center, the central business district of Pasig City, has office spaces available for sale. That said, should youinvest in an office space and avoid the rental fees once and for all?
Advantages of Renting
Rentinggives you access to prime properties without shelling out a ton of money. This is especially beneficial for small- and medium-sized companies that don’t have the budget yet to buy an office space. Some lessors may request an advanced deposit or even post-dated checks, but it’s still far more affordable than buying the space.
The money you saved can be allocated to marketing and other projects that will grow your business. Moreover, if you’re only renting the space, the lessor is responsible for the maintenance, so if you find any damaged fixture in your office, the lessor will shoulder the repairs.
Depending on your lease contract, the lessor may even agree to pay for a certain utility, but this is not to be expected at all times. As a general rule, tenants are responsible for paying all utility bills. The things you can possibly negotiate with your lessor are security and waste management.
Renting also makes departing easier, especially if your business is still developing that you’re going to need a bigger office soon. Simply put, if you’re a startup or a medium-sized company with plans for growth, renting is your best and most practical option.
When Should You Invest in an Office Space?
When your company has already outgrown the office space that you’re renting, you’re going to look for a new and bigger space. But should you consider buying that new space instead of simply renting it?
When you buy an office, it becomes part of your assets rather than your monthly expenses. This looks better in your financial statements but before signing that check, consider the condition of the market. Is there an economic bubble? You may find that you could’ve bought the property for a lower price if you just waited for some time. However, experts have mixed views and opinions regarding the”right time” to buy a property: You invest in an office space to use it, not to speculate its prices.
The Ortigas-Pasig-Mandaluyong area has a 6% vacancy rate, while BGC and Quezon City has 7% and 15%, respectively. If the nature of your business requires you to operate in these prime locations, then you should focus your search for new office space there. Otherwise, consider areas outside Metro Manila, where property prices could be lower.
The value of office spaces are actually predicted to spike in 2022 and there are also the current issues of tax laws and foreign policies, among many others, that affect the market and property prices. If you’re confident about the economy, then you can invest in an office space and call it safe bet.