Leechiu: Office space demand slowly rising; BPOS still key takers
LEECHIU Property Consultants on Monday said office space demand is slowly improving, but a chunk of these are still being taken up by business-process outsourcing firms, though locators are looking outside of Metro Manila.
Office space take-up for the first quarter of the year hit 109,000 square meters, still down 31 percent from the previous year’s 158,000 square meters, but 22 percent higher than the previous quarter's 89,000 square meters.
David Leechiu, the company's CEO, said there are still 266,000 square meters of live requirements by locators that will most likely be concluded this year. BPOS will take in some 88,000 square meters, while Philippine offshore gaming operators, which had no transactions since last year due to several issues, are seen to return with 31,000 square meters of possible expansion projects.
The company said for the first time in history, BPO take-up from the provinces accounted for 43 percent of the total back office take-up in the country. “Iloilo accounts for the biggest BPO takeup in the entirety of the Philippines with about 48,000 square meters worth of transactions,” the company said.
Improving confidence
LEECHIU said the trend of decreasing contractions supported by quarter-on-quarter increases in office demand were signs of improving investor confidence.
Meanwhile, vacancy rate across Metro Manila is at 11 percent, amounting to 1.4 million square meters most of which are in Quezon City and in Ortigas.
“But it is worth noting that the vacant spaces are spread or fragmented across 330 buildings. Of that total, only 40 buildings have vacancies larger than 10,000 squae meters,” the company said.
The residential sector, on the other hand, is also bouncing back from its lowest point in 2020.
“Recovery in the upper middle to luxury segment has been significant. In contrast, the stricter 2021 quarantine measures from March 29 to April 30 (MECQ) will most likely continue to affect demand in the mid-income and lower segments,” the company said.
Capital values at the same time have remained steady as developers were quick to strategize on launching new projects to maintain market velocity, it said. Rents softened owing to the lockdowns and quarantine restrictions, but many unit owners have opted to leave their property idle rather than bring their rates down.
“Investor sentiments will improve across all sectors in the next few months once a meaningful portion of the population is vaccinated towards the fourth quarter of 2021,” Leechiu said.