Philippine office demand up 34% despite lockdown
By Denise A. Valdez, Reporter
DEMAND for office space grew 34% during the lockdown as the information technology and business process management (IT-BPM) industry continued to expand, going against expectations as many businesses suspended operations during the period.
In a statement Tuesday, real estate consultancy firm Leechiu Property Consultants (LPC) said demand for some 54,000 square meters (sq. m.) of office space were recorded from March 15 to May 31, or the period of the strict lockdown.
This resulted in 211,000 sq. m. of office demand for the first five months of the year, where 60% are in Metro Manila and 40% are in provinces.
“We expected zero demand in the second quarter of 2020 but despite the (lockdown), we’ve seen transactions concluded,” LPC President and CEO David T. Leechiu said in the statement. “Philippines is most likely the only office market in the world that is still growing in demand today.”
The Philippines started imposing quarantine measures since mid-March due to the coronavirus disease 2019 (COVID-19) pandemic. This forced most companies in “non-essential” businesses to require their staff to work from home, but exempted some such as the business process outsourcing (BPO) sector.
Of the recorded office space demand in the past five months, LPC said most came from the IT-BPM sector at 37%. Philippine offshore gaming operations (POGOs) comprised 13% of the demand, while the remaining 50% were divided among traditional offices, corporate tenants and flexible workspaces, among others.
“We…expect IT-BPM demand to surge once more by year-end when both the Philippines, US and other countries would have adapted to a new normal,” Mr. Leechiu said.
Aside from the resilience of IT-BPM, Mr. Leechiu said POGOs might make a comeback by the end of the month with 30-50% back in operations through a compromise agreement with the Bureau of Internal Revenue (BIR).
The Philippine Amusement and Gaming Corp. (Pagcor) decided in May to allow POGOs to resume operations once they settle taxes with the BIR and other obligations with Pagcor, the state agency that licenses casino gaming in the country.
“As soon as travel restrictions are lifted, we are optimistic that POGOs will be back to full capacity, and will start revisiting their expansion plans,” Mr. Leechiu said.
He also said some companies may move service operations from China to the Philippines, which would again further drive up office demand in the country. “They will do that by importing talent from China to operate from the Philippines following the POGO operating model,” Mr. Leechiu said.
In a virtual briefing in April, LPC said it estimated 800,000 to 1 million sq. m. of office transactions to be completed this year, about 43-54% lower from last year’s 1.75 million sq. m. Office supply is also seen dampened 44% to 842,000 sq. m. because of construction delays.
