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Philippine office rentals likely to hit modest goal
OFFICE SPACE rented by companies is expected to exceed projections this year despite market volatility brought by a coronavirus pandemic, as demand from outsourcing companies continues to rise, according to Leechiu Property Consultants.
Office rentals had reached 539,000 square meters (sq.m.) as of end-November, 38% higher than the 389,000 sq.m. in 2020, it said in an e-mailed statement on Monday. It is still just a fraction of the 1.75 million sq.m. demand that Leechiu logged in 2019, before the world was battered by the health crisis.
“We are pleased to be seeing new brands from among the captives looking to offshore and outsource to the country,” Chief Executive Officer David T. Leechiu said.
Office space and rental prices have declined in many areas as many companies adopted work-from-home arrangements amid the pandemic. Some experts forecast a continuous shift to hybrid work mode once the global health crisis is over.
Leechiu in October said office space demand would reach 450,000 to 500,000 sq.m. by yearend due to rising demand from the IT-business process management companies.
The real estate consultancy firm’s recent study projected that IT-BPM companies would take up at least 54,000 sq.m. in the fourth quarter.
The property consultant expects the industry to rent at least 54,000 sq.m. this quarter, which should boost the full-year level to 229,000 sq.m.
It would have been higher if not for the lockdown enforced last quarter amid a fresh surge in coronavirus infections spurred by a more contagious Delta variant.
“Even at the height of the pandemic in 2020, IT-business process management companies took up space,” Mr. Leechiu said. “We foresee that they will remain a catalyst of the office segment for as long as outsourcing remains a viable solution from recovering firms in the West.”
Leechiu Commercial Leasing Director Mikail C. Barranda last month noted that while outsourcing companies continue to expand in the country, the growth is slower than before the pandemic hit.
The property consultant expects hybrid work arrangements to rise. Most companies will slowly rent more office spaces in the business districts, while some of their employees continue to work from home.
Online retail companies or the growing e-commerce market would also drive growth in leasing demand for both office and industrial spaces, it said.
Demand for industrial and warehousing space had also been rising to fulfill logistical requirements, it added. — Keren Concepcion G. Valmonte