The number of vacancies in Metro Manila’s office space segment of the property market reached an all-time high in 2024, traced largely to the departure of offshoring and outsourcing companies, corporations and internet gaming license holders or Philippine Offshore Gaming Operators, popularly known as POGOs.
Up to 407,010 square meters (sqm) were vacated by leaseholders last year, up 21.5 percent from 334,890 sqm in 2023, property consultancy JLL told reporters.
Offshoring and outsourcing companies accounted for 46.3 percent of the vacancies, while 30.8 percent was vacated by corporations and 22.9 percent by internet gaming operators, Janlo delos Reyes, head of research at JLL, said in a press briefing on Tuesday.
In his third state of the nation address in July 2024, President Ferdinand Marcos Jr. ordered the ban of POGOs by the end of 2024. In a separate report last December, Malaya Business Insight quoted a social media post by President Marcos saying POGO licenses have been cancelled.
The combined cities of Taguig, Makati and Quezon City shouldered 238,000 sq.m. of office spaces that were vacated, or 58.9 percent of the total floor area.
With this development the vacancy rates will move a tad higher at 20 percent in 2025 from 19.6 percent in 2024, reflecting the higher number of leaseholders that left their office spaces, according to Delos Reyes, who also cited the new reality of a lower pre-commitment level than the 682,000 sq.m. expected previously as well as the low recommitment level that will come online this year.
The current office stock is about 11 million sqm.
The Metro Manila office market will remain “tenant favorable” as the monthly lease rates fall to P950 per sqm in 2025, down 3 percent from P982 per sqm per month at the end of 2024, Delos Reyes said.
This is also due to the new supply coming into the market and the low pre-commitments from prospective leaseholders pressuring property owners to lower rental rates, the JLL research head said.
The bane of the office space sector, which remains soft, comes from the hybrid work arrangement now shaping the landscape of human resources.
“Despite this, we see an upside because of the number of inquiries from business process outsourcing, mostly from Southeast Asia and Australia. It may not be as bright, but there is an upside,” Delos Reyes said.
The inquiries made by business process outsourcing companies through JLL account for 40 percent of the total queries, which the property consultancy expects to go as high as 70 percent in the months ahead.