Office demand improved by 68 percent to 109,000 square meters in the first quarter from the fourth quarter, boosted by the continued take-up from business process outsourcing companies and the fast growing e-commerce sector.
Leechiu Property Consultants chief executive David Leechiu said in an online briefing another 266,000 sq. m. of office leasing requirements were being transacted that could further boost demand.
He said most companies looking for office spaces were engaged in BPO, offshore gaming and retail.
The BPO sector accounted for largest single take-up at 33,000 sq. m. in the first quarter, followed by e-commerce at 19,000 sq. m. which more than tripled from 6,000 sq. m. in the fourth quarter of 2020.
“E-commerce is proving to be a sunshine industry,” Leechiu said.
Leechiu Property associate director Mikko Barranda said Philippine offshore gaming operators started showing interest again to take up space with combined requirements of 31,000 sq. m.
“While it’s too early to tell if POGOs have decided to remain in the country, a resolution of their concerns would help affirm their commitment to the country,” Barranda said.
Several POGOs left the country in 2020, not only because of the pandemic but also because of the stringent tax rules imposed by the government against these companies.
Baranda said if the pending transactions were finalized, total office demand could hit 400,000 sq. m. this year, higher compared to the 2020 level.
Office vacancy rate across Metro Manila reached 11 percent in the first quarter, or equivalent to 1.4 million sq. m. Most vacancies are in Quezon City and Ortigas.
“But it is worth noting that the vacant spaces are spread or fragmented across 330 buildings. Of that total, only 40 buildings have vacancies larger than 10,000 sq. m.,” Barranda said.
The consultancy firm said the residential sector also started to recover as demand in terms of unit sales picked up in the first quarter.
LPC associate director Tam Angel said that while recovery in the demand for upper middle to luxury segment was significant, the demand for mid-income and lower housing units would remain weak following the recent move of the government to place Metro Manila and nearby provinces under sticker quarantine restrictions.
Land values also remained steady as developers were quick to strategize on launching new projects to maintain market velocity.
Rents also softened because of the lockdowns and quarantine restrictions.