PH office space occupancy 3rd highest globally in H1 - consultancy firm

Philippine office space occupancy averaged 80% in the first half of the year, the third-highest in the globe mainly due to the growth of the business process outsourcing (BPO) industry, real estate consultancy firm PRIME Philippines said Thursday.

According to PRIME Philippines executive vice president Cholo Florencio, the country’s office rate was only behind Singapore’s 88% and India’s 85%. It is also higher than the global average of 70%, the United States’ 62% and Europe’s 60%.

Florencio attributed the occupancy rate to the BPO sector, which reported an annual growth rate of 7% to 8%, the increasing demand from the government, and the high adoption of flexible working arrangements.

For Metro Manila alone, the occupancy rate was recorded at 85%, slightly higher than the previous year’s 84%.

“I think we will be able to sustain our momentum in terms of adding a bit of occupancy levels. The challenge really is when more buildings will be left by the online gaming companies,” Florencio said on the sidelines of a briefing in Makati City.

President Ferdinand “Bongbong” Marcos Jr., in his third state of the nation address (SONA) in July, announced the ban on Philippine Offshore Gaming Operators (POGOs), and ordered the Philippine Amusement and Gaming Corp. to wind down and stop all operations by the end of the year.

A cost-benefit analysis by the Department of Finance (DOF) showed that the POGO industry had a net cost of P99.52 billion to the Philippines, equivalent to 0.41% of the country’s economy as of 2021.

According to Florencio, there has been a decline in office space takeup, especially from POGOs since the COVID-19 pandemic, and vacancies are expected moving forward following the ban ordered by Marcos.

“There has been a very sharp decline ever since the pandemic. As you all know, the pandemic really triggered everything. It’s unfortunate lang, of course, we’ve heard a lot of negative stories about criminality, about scams that have really affected the POGOs here,” he said.

“The President has announced of course a total ban so once it is fully implemented, it will be more challenging for developers to attract more (locators) to come in,” he added.

To address the decline of takeups expected from the exit of POGOs, Florencio said developers should offer more to prospective locators such as including more benefits for them to take up space, like building more amenities.

Florencio noted, however, that he believes the country will be able to sustain the office occupancy rate as demand is still picking up from occupiers.

“Major economic driver pa rin talaga ang BPOs and then government has taken a large share of office space,” noting that government agencies have picked up demand as a lot of them need an interim space given the ongoing rehabilitations of their headquarters.

“Demand can also translate to co-working facilities, so it’s not just the traditional office space you’re seeing right now. There’s consistent demand for co-working spaces, because co-working also technically is part of the office sector,” he added.—RF, GMA Integrated News