Property consultant Colliers sees the complete exit of Philippine offshore gaming operations (POGO) in the Philippines will raise vacancy in office buildings in the metro to 22.2 percent.
Kevin Jara, Colliers director for office services – tenant representation,, said in areas like the Bay area, where there is a concentration of POGO operations, vacancy can rise to 51 percent.
“In other areas like in Makati fringes, vacancy rates may rise to 43 percent. Other areas are not affected, primarily due to the reason that pogos are not allowed to operate in these locations in the first place,” Jara said.
Colliers said total vacated office spaces as measured by net takeup could hit 154,000 square meters (sq.m.) this year,
Net take-up – the amount of new office space occupied after deducting that were vacated – was recorded at 173,000 sq.m. in the first half of the year.
Jara said POGO operations in the country currently occupy a total of 489,000 sq.m., about 3.5 percent of office spaces that are occupied in Metro Manila.
The Bay Area has 358,000 sq.m. or 73 percent of total, Jara said.
At its height, POGOs occupied 13 million sq.m.
The top five developers in the Philippines, which control a third of the office stock in Manila only have an exposure of less than 5 percent, Jara noted.
Colliers pegged office space transactions in the first half of the year at 459,000 sq.m., up 18.6 percent from last year’s 387,000 sq.m.
Of the transactions, 56 percent came from traditional office occupiers while the business process outsourcing industry cornered 26 percent of the total.
About 16 percent of the transacted space came from POGOs, Jara said.
“So it’s not the POGOs that’s really driving the market and hasn’t been since the pandemic. It is still the traditional office occupiers and the BPOs that are propping up the market,” he said.
In the past, POGOs corner about 20 percent of new leases space in a given period, according to Jara.
Colliers said vacancy in Metro Manila currently stands at 18.3 percent, similar to last year.
“But this is actually an improvement from the 19.3 percent that we had in the first quarter,” Jara said.
Jara, however, said the projected vacancy rate post-POGO will taper off in the next two yearx “as supply pipelines also taper and demand from BPOs and traditional firms is sustained.”
“Conservatively we will expect that we might reach 20 percent but we might see a start of that number going down in the next two years as shown in this chart,” he said.
