Record influx of new office units in MM seen in ’18

Metro Manila will likely see a record influx of new office supply this year, but this won’t necessarily cause a glut as the rebounding business process outsourcing (BPO) industry and the burgeoning offshore gaming segment will keep landlords afloat, Leechiu Property Consultants (LPC) said.

Veteran property consultant David Leechiu, founder and president of LPC, said in a press briefing on Monday that office sector take-up this year would likely rise to a new high of 937,000 square meters (sqm) from last year’s record 775,000 sqm.

Sentiment in the office market has “improved dramatically,” from the wait-and-see attitude seen last year to doing deals this year, Leechiu said.

Total office pipeline in the metropolis this year is estimated at 1.5 million sqm, 20 percent of which are at risk of being delayed, Leechiu said.

On the demand side, 937,000 sqm of office space will likely be taken up, mostly by the BPO and online gaming sectors, he said.

“We expect a big rebound in BPO industry and expect the online industry to continue to grow,” Leechiu said.

Demand from BPOs is seen to rebound to 485,000 sqm this year from last year’s 358,000 sqms, and sustaining such level through 2020. Last year, office take-up by BPOs fell by 26 percent.

However, Leechiu’s annual forecast on BPO demand is more conservative than the annual demand of 560,000 sqm projected by the Information Technology and Business Process Association of the Philippines (IBPAP) annually.

“Pre-commitments are a testimony to how BPO and online gaming industry will grow this year,” he said, noting that as of end-January, 35 percent or 415,582 sqm of the office supply pipeline in the metropolis for 2018 had already been occupied or were pre-committed. Such pre-commitment accounted for half of the office take-up for the whole of last year and marked “the largest pre-commitment activity in history,” he said. —DORIS DUMLAO-ABADILLA