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Office take-up seen to breach 1M sq.m. this year
By Arra B. Francia, Reporter
THE PHILIPPINE office market is expected to record a net take-up of more than one million square meters (sq.m.) by the end of 2018, driven by the expansion of outsourcing companies that previously held off their expansion plans last year.
This is according to real estate consultancy services firm Colliers International Philippines, which attributed the strong demand to Business Process Outsourcing (BPO) firms.
For the first half of 2018, Colliers said net take-up reached 641,000 sq.m., higher than the 638,000 sq.m recorded in the same period a year ago. The company is further projecting a net take-up of 413,000 sq.m. for the July to December period, pushing the full-year figure to a record high of 1.06 million sq.m.
Demand from BPOs and knowledge process outsourcing firms accounted for 42% of the total transactions in the first half of 2018, higher than their 31% share in the first half of 2017.
It noted BPOs previously delayed their expansion plans due to uncertainty in the office market as a result of the protectionist stance of United States President Donald J. Trump.
There was also a perceived decline in peace and order situation in the country due to extrajudicial killings under President Rodrigo R. Duterte, and a delay in the proclamation of accredited buildings by the Philippine Economic Zone Authority.
The strong take-up indicates these concerns have now been addressed, according to Colliers.
“We have observed that transactions in the first six months of the year remain diversified and Colliers believes that this bodes well for the Manila office sector in general,” Colliers Philippines Director for Office Services Dom Fredrick Andaya said in a statement.
Traditional offices accounted for 34% of the net take-up for the first half, driven by government agencies, construction, telecommunications, banking, finance, warehousing, logistics, and manufacturing firms. Most of the spaces are located in the Bay Area as well as the Makati Central Business District.
Offshore gaming firms meanwhile accounted for 24% of the total deals for the first semester of 2018 at around 180,000 sq.m. The company noted that while offshore gaming companies initially started occupying spaces in the Bay Area, they have now started expanding to other areas in the second quarter, mostly to Quezon City and the fringe areas in Makati City.
Colliers said the strong demand will be complemented by the record-high completion of new office buildings as well.
From around 630,000 sq.m. of leasable space completed during the first half, Colliers said at least 440,000 sq.m. will be added for the second semester.
Completion of new office spaces is further expected to ramp up starting 2019 to 2021, with Colliers projecting 820,000 sq.m. to be added during this period located mostly in the Bay Area, Fort Bonifacio, and Ortigas Center.