By Adrian H. Halili / BusinessWorld
TRADITIONAL offices along with information technology and business process management (IT-BPM) firms will continue to drive post-pandemic office demand, a real estate consultant said, as it recorded more spaces taken up by these entities in the first quarter of the year.
“[Growth will still be driven] by the [IT-BPM] sectors and the traditional offices because earlier, the Asia Development Bank said that the Philippines will most likely grow by 6% this year and 6.2% next year,” said Leechiu Property Consultants (LPC) Chief Executive Officer David Leechiu in a press briefing on Wednesday.
“[This] will make us one of the fastest growing economies and that means consumption. Many companies are wanting to come here to tap into that market,” he added.
For the first quarter of 2023, total demand for office spaces more than doubled to 264,000 square meters (sq.m.) from 124,000 sq.m. seen in the same period last year.
Demand for office spaces mainly came from IT-BPM and traditional sectors.
According to LPC Director for Commercial Leasing Mikko Barranda, live demand during the quarter reached 497,000 sq.m. with Metro Manila, contributing the bulk at 73% of the total, with provincial areas at 27% accounting for the rest.
“Despite the havoc brought by the pandemic … we’ve seen heightened market activity across all sectors of the real estate, which tell us we are in the midst of a post-pandemic recovery.” Mr. Barranda said.
Office space demand in Metro Manila was mainly driven by traditional offices at 49% or 178,000 sq.m. The rest are accounted for by IT-BPM at 114,00 sq.m. and Philippine offshore gaming operators (POGOs) at 71,000 sq.m.
Meanwhile, the majority of demand in provincial areas was driven by IT-BPM at 96% or 130,000 and traditional offices occupied 4% or 5,000 sq.m.
The total vacancy during the first quarter totaled 2.6 million sq.m., 40% of which are fragmented spaces.
“We expect another 969,000 sq.m. to be completed by the end of 2023,” LPC said in its report.
According to data from LPC, the supply of office spaces will significantly start to decline from 2024 until 2026. It expects overall vacancy to decline to 207 sq.m. in 2026 from the 1.32 million sq.m. expected this year.
“Another 1 million [sq.m.] will enter the market this year, but we will see a deficit of buildings in 2024 to 2026, which tells us this is an opportunity for developers to capitalize,” Mr. Barranda added.