More inquiries, requests for meetings and site inspections from IT-BPM locators since 4Q 2020 up to today indicate the continued expansion of the office sector in the Philippines and its possible recovery in the coming months.
“The announcement of forthcoming vaccines has given everyone a fresh boost of hope. We’re seeing faster decision-making among IT-BPM firms as they lay out plans for expansion not only in Metro Manila but also in the provinces. It’s an exciting time and we project that many of these negotiations are being finalized now or will be closed in the coming months,” according to Mikko Barranda, associate director of Leechiu Property Consultants (LPC).
LPC deals with eight of the 10 biggest IT-BPM players in the country, which has been driving the growth of the Philippine office market for over a decade now.
He added that current negotiations for space now also cover Iloilo, and because supply there is running out fast, locators have also shown renewed interest in Cebu and Pampanga—in addition to Metro Manila.
On the other hand, Philippine Online Gaming Operators or POGOs, which overtook BPOs in 2019 as the largest driver of demand for Philippine office space, posted no new transactions beginning 2Q 2020 when new taxation regulations were imposed on them. A travel ban in the Philippines also curtailed whatever expansion plans they may have had.
Barranda qualified that a Temporary Restraining Order from the Supreme Court issued in January 2020 on those tax guidelines for POGOs “has stopped the bleeding” or the contraction of space occupied by these firms.
Despite many lease terminations in 2020, the industry still maintains an existing footprint of 1.37 million sq m of office space, making them the second-largest occupier next to BPOs that account for 7.2 million sq m as of 2019.
“POGOs still maintain a significant presence in the Philippines. Perhaps by next quarter, we will know if they will start expanding again and contributing to the recovery of the property market in 2021,” he observed.
They vacated 330,000 sq m of space from 2Q 2020 up to January 2021, according to LPC studies. Of that total, 49 percent were Peza-registered spaces keenly desired by IT-BPMs, observed Barranda. Peza spaces, particularly in Metro Manila, have been scarce. “And we foresee that those Peza spaces will be back-filled by BPOs,” he said.
In 2020, IT-BPM take-up in the provinces also accounted for a record 43 percent of all their transactions in the country. With the opening of new international airports and the upgrading of the older facilities outside Metro Manila, these firms are likely to continue their provincial expansion and to explore other locations, said Barranda.