The Philippines remains one of the largest office markets in the world, as office space take-up reached nearly 1.5 million square meters in the first eight months, up 9 percent from a year ago, a property advisory firm said Friday.
Leechiu Properties Philippines said the office sector managed to support real estate development in the country despite two and a half years of the pandemic
“Despite our remote working, and all other headwinds that we are now facing as a country and globally, the Philippines remains one of the largest office markets in terms of volume. Even with Omicron that presented a lot of disruption from January and February of this year, we still managed to transact 589,000 square meters of leasing transactions,” Leechiu director for commercial lease Mikko Barranda said on the final day of the International Innovation Summit.
He said the highest uptick was noted in July to August with 162,000 sq. m., the largest the sector saw in the last two years.
Leechiu said with the recovery of almost all sectors of the economy, it expected higher leasing demand and higher transactions in the last four months of 2022.
It said the forecast would be sustained by an up and coming trend in leasing where business process management companies prefer the so-called microsites as their operation hub.
Microsites have smaller capacities ranging from 200 to 300 heads, as opposed to one large center, which was the past trend.
More microsites are coming up in areas outside Metro Manila. Cebu, Davao, Iloilo and other non-traditional sites are leading this trend, it said.
“We are a big proponent of countryside development and I know that the IBPAP [IT & Business Process Association of the Philippines] will support that claim and we believe that this trend will continue to be relevant and will continue to be to attract many of the locators,” Barranda said.
He said the IT-BPM sector continued to drive the growth of the real estate sector, accounting for 42 percent of the entire take-up.
Office vacancy was at 18 percent or about 2.5 million sq. m. of available space, higher than the what the sector was used to in previous years. The rise in vacancy was attributed to office spaces abandoned by offshore-gaming tenants.
Leechiu anticipates a huge supply in office space in the next two years as projects were pushed back by the pandemic and resumed construction almost at the same pace.
About 17 million square meters will go on stream, with Metro Manila accounting for 14 million sq. m.
The 3-day IIIS 2022 culminated in the submission of the new IT-BPM 2028 roadmap by IBPAP to the Department of Trade and Industry and an agreement among stakeholders to take the leap forward.