Written by Revin Mikhael D. Ochave, Reporter
According to Leechiu Property Consultants (LPC), the demand for office spaces may reach 1 million square meters (sq.m.) in the current year, driven by the growth of the information technology and business process management (IT-BPM) industry.
Based on our past observations, a significant amount of leasing transactions tend to occur during the final quarter of the year. We are feeling hopeful and confident that we will exceed our numbers from 2022. It is possible that we will reach 1 million square meters by the end of this year, as stated by LPC’s Director for Commercial Leasing, Mikko Barranda, during a media briefing in Makati City on Thursday.
“Let me remind you, the total for last year was 989,000 square meters,” he stated.
He reported that the figure for the end of September was 809,000 sq.m., which is a 17% increase from the same time last year.
This year’s estimate brings the office market closer to the “landmark demand years” of 2018 and 2019, when the number reached 1.3 million and 1.7 million square meters, as described by Mr. Barranda.
The IT-BPM sector is expected to hire 135,000 workers, which was cited as the main driving force for the yearend projection.
According to Mr. Barranda, the drivers remain unchanged and the IT-BPM industry is maintaining a steady pace. He referenced the IT and Business Process Association of the Philippines’ prediction that hiring rates this year will be among the highest.
Last year, the amount of 120,000 was considered significant and the fact that we were able to exceed that amount demonstrates the considerable growth in that industry,” he stated.
“Hybrid and remote work are available options, but they still hold a significant presence in the market,” he stated.
Based on LPC’s findings, the IT-BPM industry makes up 45% of the overall demand for office space.
According to a report by LPC, a majority of lease agreements involve multiple locations, in contrast to the previous practice of leasing large sites for IT-BPM operations in one location.
The report stated that 37% of IT-BPM transactions, totaling 124,000 sq.m., were primarily leased in Metro Cebu, Quezon City, and Clark, Pampanga. This suggests that IT-BPM companies may be creating microsites or implementing a hub-and-spoke strategy to enable employees to work closer to home, potentially increasing employee retention.
According to LPC, there is currently a supply of 18.1 million square meters of office space, with 82% located in Metro Manila. The nationwide office vacancy rate is currently at 19%.
According to the statement, Bonifacio Global City and Makati City remain the top choices for office operations due to their low vacancy rates of 9% and 13%, respectively.
In the final quarter of 2023, there is an estimated 432,000 sq.m. of new office space that will be finished. The completion rate is expected to decrease after 2024, leading to lower vacancy rates as demand for office space improves.
According to Mr. Barranda, the suggested prohibition of Philippine offshore gaming operators (POGO) would not significantly impact the demand for local properties because the market is now less dependent on the industry.
He stated that the POGO industry has consistently been unpredictable and difficult to rely on for demand.
Mr. Barranda stated that the property sector would be negatively impacted if companies decide to leave the country. This would not only affect the current demand, but also the established presence these companies have in the country. If they were to completely leave, there would be a gap in the supply, particularly in areas where they have a strong presence.
One positive aspect of the current market is that we are not overly dependent on it. We have the ability to bounce back even without the influence of POGO. However, any demand from this sector will greatly contribute to decreasing vacancy levels, especially considering the projected supply in the next five years. These were the words of the speaker.
In the previous month, the Senate Committee on Ways and Means proposed a gradual elimination and eventual removal of POGOs from the nation due to the harmful effects on local communities where they are situated.