BPOs seen driving office space demand

THE business process outsourcing (BPO) industry will continue to drive demand for office spaces, Colliers Philippines reported.

In a virtual briefing on Friday, Dom Andaya, Colliers director for office services, said a strong demand from the outsourcing market is seen as the United States economy opens up, which drives consumer demand.

Andaya said the IT & Business Process Association of the Philippines projects the industry to grow both in terms of revenues and FTEs or full-time employees.

“Outsourcing as a strategy before, during the good days, is to increase profit. Right now, or similar to what happened after the global financial crisis, outsourcing as a strategy to recover and rebuild will be significant moving forward,” Andaya said.

He added that BPO companies are also looking to expand outside Metro Manila and key cities due to the “infrastructure development and the availability of talent in the various locations all around the country.”

The remote work set-up also allowed the companies to consider “various models in terms of their expansion.”

Meanwhile, he reported that the volume of vacated office spaces slowed down in the third quarter to 94,000 square meters (sqm) from 197,000 sqm in the previous quarter.

Transactions for the quarter, on the other hand, stood at 62,000 sqm from 85,000 sqm in the second quarter.

The net take up also narrowed in the third quarter to -21,000 sqm from -86,000 sqm in the second quarter.

Andya said 157,000 sqm of spaces were completed in the third quarter, bringing the total office stock in Metro Manila to 12.83 million sqm in the nine-month period.

Andaya noted that their vacancy forecast of 15.6 percent this year remains on track as vacancy rate stood at 13.9 percent in the third quarter.

This translates to around 1.8 million sqm of vacant office space currently.

“With the amount of supply coming in 2022, we see that the 15.6 percent would still increase around 17 percent, but I think that will be it. That’s going to be the start of the vacancy decline, in line with the rebound of the market,” he said.

The firm’s 20-percent average reduction in terms of rental rates in Metro Manila also remains on track, according to Andaya.