A property consultancy said it is high time government considers lifting the moratorium on the establishment of economic zones in Metro Manila to augment supply for office space as demand driver, the business process outsourcing (BPO) and knowledge process outsourcing (KPO) may henceforth require bigger spaces for physical distancing.
As of May, the government approved the declaration as ecozones of nine information technology (IT) centers and one IT park but these are outside Metro Manila.
Another consultancy company said the office property sector will be driven anew by IT-business process management (IT-BPM) and Philippine offshore gaming operations (POGO) but business continuity plans (BCP) will force companies to move away from metro and business hubs.
Joey Bondoc, senior manager for research at Colliers Philippines said knowledge process outsourcing (KPO) companies, the least affected among the outsourcing sectors, have been snapping up the remaining spaces in areas declared as ecozones by the Philippine Economic Zone Authority in the first quarter of the year.
“ Stakeholders should now push for the lifting of moratorium on economic zone approval in Metro Manila to entice more outsourcing locators,” Bondoc said.
Administrative Order 18 issued June 2019 disallows the establishment of ecozones within Metro Manila to disperse businesses to the countryside. Most ecozones in Metro Manila are geared to IT-BPM companies.
He added there are about 340,000 square meters available PEZA spaces in Metro Manila from this year up to 2022 which can easily be taken up in a year or a year and a half.
Bondoc also bats for the aggressive approval of PEZA space outside of Metro Manila. Key locations include Cebu, Iloilo, Bacolod, Davao and Clark in Pampanga.
He said these office spaces should be able to cater to BPOs whose operations are not ideal for work from home arrangements due to the sensitive and proprietary information they handle.
Bondoc said demand continues to be sluggish in general.
If at all, Bondoc sees a demand pickup from both outsourcing and traditional segment lokely in the first quarter of 2021. That is, if market sentiment starts to improve in the second half of the year.
Among the business districts likely to record recovery in 2021 are Quezon City, Fort Bonifacio and Ortigas Center. A mix of outsourcing and traditional occupants have pre-leased office space in these business districts.
According to Bondoc, the rebound in demand should also offset a sluggish take-up from POGOs in 2020.
“Once the deployment of POGO employees normalizes and travel bans are lifted, Colliers sees greater office space absorption in Alabang and Quezon City,” Bondoc said.
Colliers notes muted leasing in the Bay Area in the next 12 months due to a pause in POGO transactions.
But Bondoc said POGO deals are likely to pick up once the travel restrictions are eased.
Meanwhile, JLL Philippines in a report titled `Beyond the quarantine: Restart and re-entry under the next normal’ has a different view on POGOs.
“We anticipate leasing activity from the IT-BPM, POGO and technology/digital sectors to recover somewhat following the lockdown,” said Christopher Vicic, JLL Philippines country head.
Vicic, however, sees some decentralization of demand in other parts of the metro and in key business hubs in the Visayas and Mindanao regions that may serve as interim or BCP sites to mitigate risk.
JLL anchors its rosy outlook on POGOs with the announcement last May 1 by the Philippine Amusement and Gaming Corp. allowing the resumption of partial operations to raise additional funds for the government’s efforts against COVID-19 outbreak.
“ Safety protocols will be strictly implemented. This could be our first look on how will be the next normal on office spaces work,” the report added.
JLL said the slowdown in POGO take up was already evident at the start of the year due to holidays in China and eventually amplified by travel restrictions and suspension of online gaming operations by the Philippine government.
JLL expects most of the transactions that hit pause due to the lockdown may take place in the second half of 2020 “as we observe that there remains solid occupier and investor interest at present. “