Recovery prospects amid Omicron

Despite the spread of the Omicron variant, we firmly believe that the property sector is bound for a rebound in 2022. Among the segments that will likely see a recovery this year is the office sector, whose expansion may be partly attributed to the continued office space absorption of call centers and other shared service firms.

My colleague, Maricris Sarino-Joson, director of Colliers Philippines’ landlord representation unit, believes that developers should prepare for office space demand recovery and employees’ return to traditional offices.

“We have seen a disruption due to the Omicron variant, but we believe that landlords should always be on the lookout for opportunities beyond 2022. The Omicron variant should not hinder the property market’s recovery and the much-anticipated rebound of the office sector,” Sarino-Joson said.

As we noted previously, there will likely be a heightened preference for sustainable buildings that provide natural lighting and optimize air quality, among other features. Over the next three to five years, these features should result in utility and talent acquisition cost savings and contribute to a healthier and more productive workforce.

Design requirements

The spread of new cases has prompted many firms to rethink and recalibrate. In our view, this provides an opportunity for companies to reconsider their office layout. Colliers Philippines has been proactive in assisting tenants with their design requirements as they prepare for the “great (office) return.”

Roldan Buitizon, head of Colliers Philippines’ project management team said “the COVID-19 pandemic has forced many industries to rethink their strategies, retool their workforce and reimagine ways to do things better and safer. The business of project management—or design and build—is one of those industries at the forefront of making this happen.”

WFH flexibility

Our tenant representation team—which assists some of the largest office occupiers in the country including business process outsourcing companies and foreign professional services companies—also offers recommendations to the government to minimize the disruption of BPOs’ operations. In our view, stakeholders should remain active in coordinating with the government and pushing for the continued granting of fiscal and non-fiscal perks despite work-from-home (WFH) arrangements.

Positive trend

Colliers Philippines sees a positive trend in office space absorption within and outside Metro Manila. As of end September 2021, provincial transactions accounted for 22 percent of total office space deals, with Cebu cornering about 26,000 sqm, followed by Iloilo.

We received queries from companies planning to take up space in Metro Manila, Pampanga, Laguna, Davao and Cagayan de Oro. This means that BPO centers outside the capital region remain on the radar of outsourcing companies. We see these queries materializing in the next three to 12 months.

Despite the initial challenges brought about by Omicron, Colliers Philippines remains optimistic that the office market will rebound in 2022. Landlords, tenants and office fit out teams continue to work together to ensure employees’ safety as they report back to their respective offices. We are looking forward to the great return!

Next week, I will discuss opportunities for the residential market.