Office demand from offshore gaming firms to slow this year
TRADITIONAL offices and the information technology-business process management (IT-BPM) sector will drive demand for office spaces in 2018, as expansion of offshore gaming companies are expected to slow due to stricter government regulations.
This is according to real estate consulting firm Pronove Tai International Property Consultants, which said traditional offices will take up 60% of the 354,000 square meters ( sq. m.) in office stock already been pre-leased for this year. The remaining 40% or 143,000 sq.m. will be occupied by the IT-BPM sector.
“(Traditional offices) account for a large portion. It just became bigger because offshore gaming has been taken out, and the reason that it has been taken out is because there’s no space to take up,” Pronove Tai Chief Executive Officer Monique Cornelio-Pronove said in an interview after a presentation of the company’s 2018 market outlook.
Offshore gaming firms previously accounted for 35% of the 775,000sq.m. pre-leased space in 2017. The IT-BPM industry cornered the largest chunk at 41%, while traditional offices only accounted for 23% of the preleased space.
Pronove Tai noted government regulations are restricting the expansion of offshore gaming firms, as only two cities have granted the sector Letters of No Objection (LONOs). Local government units are asking gaming companies to secure LONOs before they can operate in a specific area.
“We’re saying the sustainability of this sector is really dependent on government initiatives, security and availability of space. To date, there’s only two cities that are giving LONOs, and only 50,000 sq.m. of space is available for this offshore gaming. These two cities are Makati and the Bay Area,” Ms. Cornelio-Pronove said.
The Pronove Tai executive added offshore gaming firms would have expanded without these government restrictions.
“What I’m encouraging is developers actually lobby for their LGUs to be more open. So I think there are certain cities that are looking at it very closely, and these three cities are Quezon City, Mandaluyong, and Taguig. They should be attuned more to their constituents and business opportunities there are available,” Ms. Cornelio-Pronove said.
Pronove Tai identified Quezon City, Mandaluyong, and Taguig as the three central business districts with the highest vacancy rates in Metro Manila at 11%, 8%, and 7%, respectively.
Without room for offshore gaming firms to expand, the company said President Rodrigo R. Duterte would have to speed up the signing of Philippine Economic Zone Authority ( PEZA) proclamations to ensure that ITBPM firms would take up spaces once buildings are completed.
“If we did not have the take-up from offshore gaming, our vacancies would have gone up in 2017 by as much as 8%, so basically the delays of the proclamation, the delay in take-up of IT-BPM, the buildings that have already been built would have been largely vacant,” Ms. Cornelio-Pronove said.
The company noted the issuance of presidential proclamations of PEZA- accredited buildings have slowed during Mr. Duterte’s term, whereas his predecessors only took one to two months to sign PEZA accreditations.