Office space Q2 take up hits 70% of 2021 level

The domestic office sector continued its recovery through the second quarter of 2022 due to the resilience of information technology and business process outsourcing (IT-BPO) companies while the China-focused Philippine Offshore Gaming Operator (Pogo) segment remained in flux.

Data from Leechiu Property Consultants showed that year-to-date leasing transactions reached 379,000 square meters, which was 70 percent of the take up in 2021.

Moreover, office demand from April to June reached 255,000 square meters—double the figure from the previous quarter.

“All the leasing activity in the past three months, from many new captives and companies doing business here for the first time, tell us outsourcing to the Philippines continues to be a reliable solution for companies in the West fighting impending global recession,” said Mikko Barranda, Leechiu Property director for commercial leasing.

The IT-BPO segment added office space “at a more modest rate” due to the hybrid work-from-home trend that started at the height of the global health crisis.

Leechiu Property data also pointed to fluctuating numbers for Pogos.

It said Pogos took up 21,000 square meters of office space in the second quarter, which was the first sign of leasing activity since the COVID-19 pandemic arrived in March 2020.

Vacating offices

Meanwhile, other Pogos continued to vacate office spaces in the second quarter, accounting for 64,000 square meters of the 170,000 square meters industry-wide contraction. The rest came from IT-BPO firms (51,000 square meters) and other companies (55,000 square meters), according to Leechiu Property.

Overall office vacancies in Metro Manila stood at 18 percent.

“Continued Pogo contractions indicate fluidity in this industry,” Barranda said.

Residential sales likewise jumped 54 percent quarter-on-quarter, which Leechiu Property attributed to “extended and flexible payment terms and investors purchased residential units to lock in current prices.”

Global recession fears and rising interests rates have also prompted many developers to hold new project launches.

Leechiu Property said new launches in the second quarter slowed by 78 percent “given uncertainties like increasing interest rates, inflation and construction materials procurement issues due to lockdowns in source countries.”