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Friday, June 21, 2024

Demand for office space expected to remain robust

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Demand for office space is expected to remain robust this year, even as the work-from-home setup will likely persist under the new normal, according to property consultants.

Leechiu Property Consultants and Colliers International Philippines said while many companies were struggling to get their workers back to the office amid the lingering pandemic, they have an optimistic outlook for the office sector which showed resilience in the past year.

New tenants are expected to come in, while existing ones are expected to renew leasing contracts despite the scare caused by the Omicron variant in the early part of January 2022.

“Omicron has affected only office expansion timelines, but not the business confidence of IT-business process management firms and other companies in the country,” said LPC director for commercial leasing Mikko Barranda.

New contracts

Barranda said some 224,000 square meters of office space deals were expected to be finalized in the first half of 2022.

“Office contractions remain at their lowest. We are seeing tenants renew leases in anticipation of recovery,” Barranda said.

The easing of quarantine restrictions and increased mobility also favor the gradual return of workers to offices.

Meanwhile, LPC said the work disruption in the Visayas left by Typhoon Odette in December 2021 emphasized the importance of fully-equipped workplaces.

“Massive power outages left scores of employees working from home unable to function. Thus, IT-BPMs and other firms in Cebu scrambled for the few fitted office spaces available to keep operating.

Although many firms will continue to adopt a hybrid set-up allowing some to work from home, majority still recognize that workplaces in business districts offer redundancy,” said Barranda.

About 540,000 square meters of office space were vacated in 2021, not only because of the pandemic but also because of the exodus of offshore gaming companies from the Philippines following China’s clampdown and imposition of higher taxes on the industry.

Of the 540,000 sq. m. of office space left empty that year, 51 percent or 277,000 sq. m. came from Philippine offshore gaming operators or POGOs.

The office sector rebounded since then, with total office demand hitting 540,000 sq. m in 2021.

Back to office

Colliers International said while the long-awaited back-to-office plans of many companies were delayed because of the Omicron variant, office landlords should find ways during this downtime to prepare their properties for the eventual and inevitable return to work and improve the marketability of their vacant spaces.

For instance, Colliers said office landlords should introduce new technologies to minimize the spread of viruses and other disease-causing microorganisms in the workplace. Among these are touch-less access in ingress/egress points, restrooms, elevators and common area, hands-free door unlock mechanisms, virtual guest passes and automatic door openers.

Innovations

Other technological innovations that landlords can implement, according to Colliers, are disinfection and sanitation equipment at the entry to the property; upgrading air-conditioning systems and introducing filtered fresh air into the building; treating surfaces with antiviral coating to prevent transmission from high-touch surfaces; and the use of negative air ionization systems to suppress airborne viruses and microbes.

Landlords should also consider assisting occupiers to implement adjustments on design and fit-outs to accommodate new social distancing norms and health features.

“The Omicron variant should not hinder the property market’s recovery and the much-anticipated rebound of the Philippines’ office market. While the country battles COVID-19 surge and new restrictions are imposed, landlords must now take action to prepare their properties for the eventual and inevitable return to work,” said Maricris Sarino-Joson, director of office services at Colliers.

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