TOWNSHIPS will be the preferred locations for offices as employers try to keep their employees in close proximity, a real estate consultancy firm said.
Lobien Realty Group (LRG) expects some recovery when business returns, even after the pandemic prompted many companies to put expansion plans on hold and Philippine Offshore Gaming Operators (POGOs) give “mixed signals” on their operations.
Total office supply declined to 751,000 square meters (sq.m.) from 1 million sq.m. in the second quarter of 2020 compared to the same period last year. The available supply declined to 378,000 sq.m. from 526,000 sq.m.
Half were leased out in the second quarter of 2020, compared to 47% in the same period last year. Vacancies decreased to 5% from 7.31%, while average rent rose to P1,195 per sq.m. from P1,110 per sq.m.
The company expects office space demand to recover by the end of the year, if the pandemic is contained within the second half.
Demand for office spaces last year mostly came from POGOs and the outsourcing industry.
POGOs occupied 36% of Metro Manila office spaces, taking up 1.16 million square meters of total office space or 10% of total leasable office stock in the country before the pandemic began. By June, five licensed POGOs shut down operations.
“These POGO operators are estimated to account for 11% of the total of 45 companies that are actively operating in the country. The travel restrictions imposed by both the Philippines and China will result in a slowdown of office take-ups from both POGOs and traditional occupiers,” LRG said.
The outsourcing industry still prefers the Philippines, the realty group said, anticipating more investments outside Metro Manila after an outsourcing business group partnered with the government to release their “Digital Cities 2025” or priority cities for investments.
There is 16% vacancy in leasable office spaces in business districts in the provinces.
Office supply in these areas rose to 307,000 sq.m. in the second quarter of 2020 from 297,000 sq.m. last year. The percentage of space leased fell six percentage points to 21%, with average rent rising to P620 per sq.m. from P551 per sq.m.
The company said that there is more demand for flexible workspaces, especially for startup companies and freelancers.
“They are often in prime locations in competitive areas, they are flexible in agreement periods, they offer a sense of community and crowd support services, they are aligned with the changing tech and business environment, and they provide access to pay-as-you-use facilities.”