A provision in an enhanced incentive package allowing an even split of remote work and on-site operations will trim office vacancy rate in Metro Manila by 5 percentage points once passed into law, according to Janlo Delos Reyes, head of research at JLL Philippines.
In a press briefing, Delos Reyes said the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) bill, if passed, will also soften the impact of the pullouts of occupiers which have been rationalizing their spaces the past years post-pandemic.
Delos Reyes said vacancy rate in office space has been on a downward trend, hitting 19 percent as of the third quarter.
He, however, did not discount the possibility this could go up to 20 percent as 1.1 million square meters (sq.m.) of space are expected to come on line by 2028.
JLL in a report said in 2025 alone, fresh supply will total 500,000 sq.m. while pre-commitment takeup is low. Office space pullouts stood at 271,370 sq.m. as of the third quarter, JLL said.
Delos Reyes said CREATE MORE, which was recently passed by the Senate, could slash the vacancy rate to 15 to 17 percent, with a provision mandating companies to adopt at least 50 percent on site work.
He said this will boost office takeup, particularly from those in the information technology-business process management (IT-BPM) which may now have to return to on-site operations.
“They will need significant space, because what they have done over the past couple of years is downsize or rationalize their spaces. A lot of these (IT-BPM) companies have increased their head count over the past couple of years even during the pandemic because they found remote work successful. We will be seeing that flip, with lot of these occupiers needing to take up space to be able to accommodate their headcount or workforce that will be back to the office,” said Delos Reyes.
But he said this is contingent to the implementing rules and regulations of the law where the 50 percent could either be on a per square meter basis or on a headcount basis.
Delos Reyes said preference and need for remote work differ across industries and functions in the IT-BPM sector.
He said in financial services, more are leaning towards return to the office because of the sensitivity of the data and information they handle. But at the same time, there are financial services firms that are employing work-from-home arrangements or remote work.
“We might still see some increase in vacancy levels attributed to the moveouts in the market,” he said.
Delos Reyes said companies will continue evaluating their office footprints at a time of soft leasing conditions as they await the passage of CREATE MORE.
