Business process outsourcing (BPOs) and traditional corporates will pick up the office spaces to be vacated by Philippine offshore gaming operations (POGO), according to property consultancy JLL Philippines.
“(Developers) need to replace those tenants that they have now. They can move back to what they’re looking at (before). I expect them to focus more on BPOs because those are the more reliable sources,” said Janlo delos Reyes, JLL head of research.
“For the longest time, (BPOs) have been the ones driving the market, and likely they’re the ones (which) will carry the market in the next couple of years,” he added.
Delos Reyes, however, downplayed the overall impact of the exodus of POGOs in the office market, noting the size to be vacated will not be that “significant.”
He said landlords in Paranaque City and Pasay City will be the most affected by the exits given that most POGOs are located in these localities.
“The volume of POGOs are not as significant as before. It was during the pandemic… (when) some of them have exited the market,” Delos Reyes said.
Delos Reyes said office space rents in Paranaque and Pasay are likely to go below the P1,000 per square meter (sq.m.) as a result of higher vacancy rates, change in tenants and the soft demand.
Rents in Paranaque and Pasay are currently “north of P1,000” according to delos Reyes.
“You’re also seeing a competitive landscape for the office market,” he said.
“If you are a BPO tenant, or a corporate, you have a lot of options in the market that you might go to. Makati, if that’s your preferred destination or Bonifacio Global City. If you want to be decentralized, you might look at Quezon City or the Bay Area, he added.
JLL said leasing of office space has been sustained in the first half of the year, recording 383,318 sq.m., up 16.91 percent from last year’s 327,848 sq.m.
A big portion of new transactions were recorded in the cities of Makati and Taguig, with Taguig posting a 18.5 percent increase to 75,101 sq.m., and Makati up 32.6 percent at 68,270 sq.m.
BPO operations contributed 39.9 percent of total leases for the first half, followed by corporate and traditional occupiers at 34.9 percent.
JLL said moveouts continued to ease just 142,371 sq.m. of space released by locators in the first half compared to 191,469 sq.m. last year.
Vacancy meanwhile dropped to 19.5 percent in the second quarter, compared to 20.2 percent in the first quarter.
Rents meanwhile remain muted, JLL said.
