Office space take-up in the country’s office market is showing signs of improvement in the recent quarters as companies are preparing to return to their offices.
Data from Leechiu Property Consultants (LPC) shows that demand for the Philippine office market registered at 109,000 square meters (sqm), 22 percent higher than the 89,000 sqm taken up in the fourth quarter of 2020.
The figure is also 68 percent higher than the 65,000 sqm demand in the third quarter of last year.
“These key developments are good indicators that companies are thinking long term and are preparing to go back to the office,”LPC said.
LPC said the IT-BPM industry accounted for the largest single take-up in the first quarter of 2021 at 33,000 sqm. This was followed by e-commerce at 19,000 sqm, which more than tripled its take-up from its fourth quarter 2020 level of 6,000 sqm.
On the supply side, the current vacancy rate across Metro Manila stood at 11 percent or 1.4 million sqm, most of which is in Quezon City and in Ortigas.
“But it is worth noting that the vacant spaces are spread or fragmented across 330 buildings. Of that total, only 40 buildings have vacancies larger than 10,000 sqm,” LPC associate director Mikko Barranda said.
LPC said the pace of office contractions has slowed down by 19 percent in the first quarter compared to the fourth quarter of 2020, greatly supported by the resilient IT-BPM and corporate occupiers.
Philippine Offshore Gaming Operators (POGO) contractions have leveled off to 118,000 sqm, not too far from the 114,000 sqm and 116,000 sqm contractions recorded in the fourth and third quarters of 2020, respectively.
The LPC study noted that the trend of decreasing contractions supported by quarter-on- quarter increases in office demand reflect improving investor confidence.
The property consultancy firm said there are more firms eyeing to transact around 266,000 sqm of office requirement within this year.
Of the total, IT-BPMs account for 33 percent; POGOs, 12 percent; and retail firms, seven percent.
“Despite the hardships the retail industry has experienced we are seeing companies adapt, innovate and commit to space in anticipation of a recovery,”Barranda said.
He added that should these transactions be completed, demand in 2021 could surpass that posted in 2020.