Demand for office space in Metro Manila remained robust in spite of the exodus of Philippine offshore gaming operators or POGOs following President Ferdinand Marcos Jr.’s imposition of a ban against their continued operation.
The executive order requires even licensed POGOs to completely cease and wind-up operations by 31 December this year.
Property consulting firm Colliers, in a report written by senior market analyst Kath Taburada, said traditional businesses and the still expanding information technology-business process outsourcing sector have buoyed office demand even with the increase in lease surrenders and vacant office spaces, particularly from POGOs.
In the third quarter alone, 57,000 square meters of office space were vacated, and Colliers expects an additional 157,000 square meters more to be vacated by year-end as more operators notify landlords of their lease terminations or non-renewals.
POGOs currently occupy some 275,000 square meters of office space in Metro Manila, representing 1.9 percent of the total office supply. This is a significant drop from the peak years when POGOs leased as much as 1.3 million square meters.
While the continued exodus of POGO operators has created vacancies in the market, it has not had a major impact on overall demand. In fact, Colliers reports that office demand in the third quarter this year exceeded the average quarterly take-up of 174,000 square meters, reflecting strong demand from other sectors such as outsourcing and traditional businesses.
A key factor behind the steady demand is that 57 percent of firms leasing office space in the third quarter cited expansion as their primary reason for acquiring new space. This indicates that, despite the decline in POGO activity, demand remains strong from sectors like business process outsourcing and other traditional industries.
Colliers said the reduction in POGO-driven demand may even benefit these sectors by providing them with more flexibility and a greater variety of options for office space. With more vacancies now available, companies in growth mode are finding opportunities to secure larger or better-located spaces.
Another factor helping to sustain demand is the stabilization of office rent rates. During the peak years, rents in some areas of Metro Manila soared to as high as P1,500 per square meter. However, rents have since normalized, making office space more affordable for businesses, particularly those in the IT-BPM sector.
Colliers anticipates that the office space market in Metro Manila will continue to adjust to the exit of POGOs. However, the overall outlook remains positive, with demand from traditional sectors and outsourcing companies poised to drive market stability. As vacancy rates rise and rental prices remain more affordable, businesses are likely to find favorable leasing conditions in the months ahead, further supporting the demand for office space.
