By Revin Mikhael D. Ochave, Reporter
DEMAND for office spaces could hit 1 million square meters (sq.m.) this year on the back of growth from the information technology and business process management (IT-BPM) sector, real estate brokerage services firm Leechiu Property Consultants (LPC) said.
“From experience, we see a lot of the leasing activity taking place in the last three months of the year. There is some confidence and optimism from our side to say that we should be able to surpass 2022 numbers. There is the chance that we should hit a 1 million sq.m. within the end of the year,” LPC Director for Commercial Leasing Mikko Barranda said during a media briefing in Makati City on Thursday.
“To refresh everyone’s mind, last year’s full-year number was at 989,000 sq.m.,” he added.
He placed the end-September figure at 809,000 sq.m., up 17% from the same period last year.
This year’s projection brings the office market closer to what Mr. Barranda described as the “landmark demand years” of 2018 and 2019 when the number hit 1.3 million sq.m. and 1.7 million sq.m., respectively.
He said the growth driver for the yearend projection is the IT-BPM sector, which is projected to hire 135,000 workers.
“The drivers aren’t any different. The IT-BPM sector [is] very consistent,” Mr. Barranda said, citing a projection from the IT and Business Process Association of the Philippines that hiring this year will be one of the highest.
“We thought that last year at 120,000 was already quite a lot and to be able to surpass that just shows that there’s so much growth in that sector,” he said.
“Of course, there’s hybrid and remote work. But quite a lot of them still take space in the market,” he added.
According to LPC, the IT-BPM sector accounts for 45% of the total office space demand.
“Notably, bulk of the lease contracts are for multiple sites, unlike the previous trend where mega sites were leased for IT-BPM operations in a single location,” LPC said in a report.
“Thirty-seven percent of the IT-BPM transactions count, at 124,000 sq.m. of space, was mainly leased in Metro Cebu, Quezon City, and Clark, Pampanga. IT-BPM firms are likely opening microsites or applying the hub-and-spoke strategy to allow their employees to work near home to maximize employee retention,” it added.
LPC added that the current office space supply is at 18.1 million sq.m., of which 82% are in Metro Manila, while nationwide office vacancy is at 19%.
“Bonifacio Global City and Makati City are still the preferred locations for office operations, as they exhibit the lowest vacancy rates at 9% and 13%, respectively,” it said.
“By the last quarter of 2023, another 432,000 sq.m. of office stock is projected for completion. Projected completions start declining by 2024 onwards, which will bring down vacancy rates while demand is expected to improve,” it added.
Meanwhile, Mr. Barranda said that the proposed ban on Philippine offshore gaming operators (POGO) would not hurt the local property demand as much since the market is no longer reliant on the sector.
He said the POGO sector has always been volatile, adding that it is “hard to bank on demand” coming from it.
“Of course, it would hurt the property sector, not so much on demand that we won’t get, but the existing footprint that they have left in the country. What ends up happening is if they will need to leave entirely, then that would leave a bit of a hole again in the supply, especially in areas where they are highly concentrated,” Mr. Barranda said.
“The good thing about the market today is that we are not heavily reliant on it. We’re somehow able to recover without the POGO. But of course, any demand coming from that sector will help the vacancy levels to come down much faster than later on as we have seen how the supply pipeline looks in the next five years,” he added.
Last month, the Senate Committee on Ways and Means recommended the gradual phaseout and the eventual termination of POGOs from the country due to the negative social impact in communities where the operations are located.
