By Denise A. Valdez, Reporter

FLEXIBLE working options used to sound like a luxury, or overly ambitious proposals from younger and trend-chasing employees repelled by the idea of working in an office. But for years the office did its job as a workplace, and it made little sense for most people to try work-from-home.

That was before 2020, which has shown a knack for upending just about every aspect of society. The coronavirus disease 2019 (COVID-19) outbreak made everyone question how they went about their everyday lives, and one of the things that came in for a rethink was office work.

Businesses everywhere were forced to adopt work-from-home starting late in the first quarter as governments imposed lockdowns to prevent the spread of the coronavirus, as case numbers rose inexorably to the millions.

This was reflected in a 5.5% rise in Metro Manila office vacancy rates and a 26% drop in new office supply, consultancy firm Colliers International Philippines said.

“When the lockdown was imposed, BPO (business process outsourcing) companies had to hold off expansions,” Colliers Research Manager Joey Roi H. Bondoc said. “We have a couple of deals that were supposed to be closed during that period, but some major clients had to step back and reevaluate their expansion plans.”

Similar decisions have been made on the other side of the fence. Some property developers have opted to suspend projects this year to gauge market demand and preserve cash.

One of these is Ayala Land, Inc., which decided not to launch any new projects this year. Another is Robinsons Land Corp., the property arm of JG Summit Holdings, Inc., which is likewise deferring some projects to cope with the pandemic.

“I think overall, property developers are trying to look at the demand in the market, and while they still can, they try to delay, push back some of their projects. That’s one of the reasons why we’re seeing a slowdown in terms of supply by 26%,” Mr. Bondoc said.

Claro dG. Cordero, Jr., research head at the Philippine office of Cushman & Wakefield, said the priority of property developers in the meantime is improving sanitation standards to suit current needs.

But he noted that the firm is on the watch for trends that may emerge from the pandemic, including the trajectory of the BPO industry as foreign firms adjust their operations and decide which functions to offshore

“While we say there are certain functions that can be relegated to work-from-home, bigger corporates in the other advanced economies will tend to look to offshore more of these functions outside of their headquarters. And us, being a repository of these outsourcing jobs, are likely to benefit from this heightened demand, or what will be a heightened demand for BPOs,” Mr. Cordero said.

The need of the moment is to find ways to maximize the efficiency of current offices. Mr. Cordero said his own firm is reconfiguring space to install more health and safety measures ahead of the return of the workforce.

This strengthens the argument over the next two or three years for a multi-location strategy, with some employees working from home and a skeletal force staying in the office.

Over the long term, however, the only recourse might be to enlarge offices to accommodate full staffing levels.

“Despite the costs attached to having an office, we still project companies to keep their physical space… Some (considerations for) maintaining the office premises are the solid infrastructure particularly the internet connection and equipment, office environments that are conducive to work, and human connection,” JLL Philippines Head of Research Janlo C. de los Reyes said.

He noted that the pandemic may have strengthened the case for flexible workspaces, but in modified form. Not the open and collaborative space that the co-working industry used to promote, but a recalibrated space that allows for physical distancing.

“We anticipate a slight increase in demand for flexible workspaces in the short term as companies may explore additional sites or back-up premises for their operations that are situated closer to their workforce given the logistics challenges and safety concerns,” Mr. De los Reyes said.

He added one of the alternatives companies are exploring is the decentralization of office sites outside central business districts to mitigate risk.

This idea is not limited to locating across Metro Manila, as Colliers’ Mr. Bondoc said companies are growing more keen on provincial locations in their business continuity plans as well.

When Luzon was put under strict lockdown in mid-March, he said companies were suddenly left with no choice but to suspend operations, as most businesses were concentrated in Metro Manila and nearby provinces.

“If we look at the business continuity plans of a lot of companies, now the option to look for sites outside Metro Manila is of utmost priority. Why? Because if another lockdown is imposed in Metro Manila or Luzon, they will be shutting down operations, and that would affect their financial performance,” Mr. Bondoc said.

Companies do not want a repeat of what happened in March, and are looking at viable locations like Cebu, Davao, Bacolod and Iloilo.

Cushman & Wakefield’s Mr. Cordero said in order to keep attracting locators, landlords should be offering greater flexibility in terms of rent concessions and sharing capital expenses to meet the additional public health requirements.

He noted the new safety norms may stick around long after the pandemic, and some design practices such as open-plan offices may no longer be viable.

Outsourcing firm, Teleperformance, said it continues to pursue expansion plans in the Philippines despite the pandemic.

Teleperformance Philippines Chief Operating Officer Mike Lytle said in an e-mail that the company is opening a new location in Cavite by the third quarter. It also remains hopeful of continuing the expansion of its Quezon City operation.

“In spite of the challenges businesses are faced with during this pandemic, we continue to pursue our growth agenda. Brands and companies are looking for a resilient partner that can help them adapt to the rapid changes that we are all trying to cope with, and we are confident that Teleperformance can fulfill those needs,” Mr. Lytle said.

Teleperformance also implemented a work-from-home scheme during the lockdown to cope with distancing protocols. The company plans to continue this in the future, blended with work in its physical office.

For new sites, Mr. Lytle said the company is looking to “create a space that is more flexible and geared for virtual delivery.” Part of this is leveraging what would normally be recreational space to add to the footprint of areas where social distancing is more challenging, like the pantry.

While work-from-home works to a certain extent, Mr. Bondoc said companies will also need to occupy more space to maintain physical distancing. He said one possibility would be to repurpose mall retail space as offices for lease.

“There are certain areas in Metro Manila where we see a high vacancy in malls. We raised the question of (whether) these vacant spaces are feasible as flexible work space. Will the vacant mall spaces be viable, ideal for co-working spaces? I think that is one option that developers should consider,” he said.

Should these plans be borne out, Mr. Bondoc said mall foot traffic could improve, which in turn will help retailers stay afloat. “It’s actually hitting two birds with one stone. You have co-working tenants, then you also have another potential customer of your mall. I think it’s a win-win.”

These office configurations remain to be seen as companies plan their expansions, particularly those in the BPO industry, which are the primary drivers of office leasing in Metro Manila.

Another outsourcing firm Alorica said despite the quarantine restrictions, it continues to hire employees to add to its workforce.

“We have seen the impact of the pandemic on unemployment; hence our recruitment team has been aggressively identifying organizations who are assisting displaced employees in finding a new work ‘home,’” the company said.

Alorica has been recruiting over the phone and via virtual interviews due to the restrictions on face-to-face meetings. Its recruitment chatbot, which was in place before the lockdown, also recorded an increase in online applications during the quarantine.

Alorica said even though BPOs are exempt from the lockdown, the company also employed work-from-home schemes to help contain the virus.

“Eligible employees have been given company-owned equipment to transition to a temporary work-at-home environment… Where work-at-home is not possible, we’re operating with a reduced workforce of employees who have voluntarily agreed to work onsite,” Alorica said.

Mr. Bondoc said not all companies can implement work-from-home schemes, as some employees deal with sensitive information that would require heightened data security protocols.

“Our estimate would be at least 40% of employees will still have to work in a traditional office space because of the sensitive information that they handle,” he said.

Another major challenge is the instability of internet connections in most households. Mr. Cordero of Cushman & Wakefield said that for the most part, the work-from-home scheme has only been resorted to because companies have no other option.

Lizanne H. Tan, head of commercial leasing at JLL Philippines, believes working from home cannot be the new normal until certain conditions are met.

“Most companies realize that although they were able to continue their operations from home during the lockdown, fast and reliable internet connectivity and enhanced data security are key to ensure that their employees are productive and the business continues to work efficiently. Until these conditions are met, work-from-home arrangements are likely temporary,” she said.

Thus, while work-from-home allowed companies to work effectively during the lockdown, offices will remain important for much of the workforce.

“In the Philippines’ case, until we have that missing link of improved infrastructure network, then I think there will still be a question as to how long work-from-home will be the mode of work. Definitely offices will still be relevant,” Mr. Cordero said.

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