The office space sector is expected to post a double-digit decline this year because of the impact of the coronavirus disease 2019, according to consulting firm.
Leechiu Property Consultants president and chief executive David Leechiu said in an online briefing office demand was expected to reach between 800,000 and 1 million square meters by the end of 2020, lower than 1.75 million sq. m. in 2019.
Leechiu said while office demand would decline this year, supply would also drop over delays in completion of buildings amid the enhanced community quarantine period.
“With the enhanced community quarantine, we expect delays in construction, therefore we are reforecasting 2020 supply to be 842,000 square meters, down 44 percent from 1.498 million square meters,” Leechiu said.
Leechiu said that in the first quarter, some 157,000 sq. m. of office transactions were finalized, down by 47 percent year-on-year because of COVID-19.
Leechiu, however, expects demand to pick up in the second half of the year.
“There are 636,000 square meters of live requirements being transacted today, and we expect this demand to grow by another 25 percent,” Leechiu said.
“Many of the transactions are expected to close beginning the second half. Based on what we know today, we are optimistic the Philippines total demand to range between 800,000 square meters and 1 million square meters this year,” he said.
Leechiu said once the travel ban was lifted, the Philippine online gaming sector would help boost domestic office demand.
He said there was an increasing interest in the Philippines from multinational corporations now in China who would seek to diversify out of that market.
“These corporations will now intend to set up disaster recovery centers in the country having observed through the success of the POGO [Philippine offshore gaming operation] sector that the Philippines can attract Chinese labor at a significant scale,” he said.
Leechiu said office demand from the information technology-business process management sector was expected to pick up as multinational companies worldwide seek to aggressively cut costs and increase production in a climate of falling revenues.
He also urged the government to approve more IT zones accredited by the Philippine Economic Zone Authority to support the potential growth in office demand from the BPO sector.
“The PEZA supply in 2020 ‘is grossly low’ or seriously deficient compared to the most conservative demand of the IT-BPM sector. To support their potential growth, this industry needs to be supported by having more PEZA zones throughout the country,” said Leechiu.