Office space demand tops 1M sqm; POGO office space more than doubles —firm

Demand for office space this year has already surpassed 2022's total, reaching more than one million square meters as of October, with Philippine Offshore Gaming Operators (POGOs) more than doubling their office space.

According to Leechiu Property Consultants (LPC), year-to-date demand already stood at 1.07 million square meters as of December 13, 2023, reflecting an 8% growth from the 988,000 square meters in 2022.

Broken down, the 1.07-million square meter demand was mostly concentrated in Metro Manila, which accounted for 79% or 841,000 square meters: 223,000 square meters in the Bay Area; 174,000 square meters in Ortigas, Mandaluyong, San Juan, Pasig; 173,000 square meters in Makati City; 114,000 square meters in the Bonifacio Global City; 96,000 square meters in Quezon City; 52,000 square meters in Alabang; and 9,000 square meters in Taguig.

Outside Metro Manila, the provinces accounted for 21% or 229,000 square meters of the nationwide demand, with the biggest share seen in Cebu with 125,000 square meters.

This was followed by Clark with 40,000 square meters, Cagayan de Oro and Davao with 11,000 square meters each, Laguna with 9,000 square meters, Pampanga with 13,000 square meters, and 20,000 square meters in other areas.

The information technology and business process management (IT-BPM) sector continued to be the primary driver of demand accounting for 450,000 square meters. This is, however, lower than the 467,000 square meters recorded in 2022.

POGOs

The IT-BPM sector was followed by the controversial POGO sector, which accounted for 185,000 square meters this year, more than doubling the 61,000 square meters in 2022, despite efforts in Congress to have them banned, as well as vocal opposition to their presence from the country's economic managers.

“I think there’s always the volatility when it comes to them, so it’s hard to say whether them taking space now will continue months from now or the next year, but at the moment we’re seeing movement from their end, there’s behavior of them taking space,” Mikko Baranda, LPC director for commercial leasing, said on the sidelines of a press conference Makati City.

LPC said Philippine vacancy rate stands at 18%, totaling 3.3 million square meters, with an estimated 711,000 square meters of new vacancy set to be added to the supply in the coming year.

Some 522,000 of live requirements are expected to extend into the coming year, with the firm projecting a deceleration in contractions and vacancy levels starting 2024.

The demand growth comes as the Department of Finance (DOF), led by Secretary Benjamin Diokno, has repeatedly called for a ban on POGOs, saying the industry has already been disallowed in other countries such as China and Cambodia.

Finance Undersecretary Bayani Agabin in October 2022 said the country can recover the potential losses from the exit of POGOs in other industries with high value added.

LPC chief executive officer (CEO) David Leechiu in 2022 said the exit of POGOs would hurt the country’s economy, with the real estate sector at risk of losing P47 billion should they be forced out. — BM, GMA Integrated News