Demand for office spaces to grow 21%

Real estate services firm Leechiu Property Consultants (LCP) expects demand for office space in Metro Manila growing by about 21 percent this year mainly due to the sustained demand from business process management (BPM) and online gaming segments.

It projected total demand rising to 937,000 square meters (sqm) by end of the year, 20.9 percent higher than last year’s record high of 775,000 sqm.

“The security and the renewed confidence in the Philippine government play a big part. And then companies globally will continue to move to drive down cost so by driving cost down, they will continue to bring jobs to the Philippines,” LPC Chief Executive Officer David Leechiu said in an interview Monday.

He said more and more multinational companies are expected to locate in the Philippines, thus driving the rise in demand for office spaces.

Leechiu said that of this year’s 937,000 sqm projected demand for office space in Metro Manila, already 415,000 sqm were pre-committed as early as January this year, the largest pre-commitment activity in history.
He expects the BPM industry demand, which posted a 26-percent drop in take-up from 2016 to 2017, to bounce back to 485,000 sqm from 2017 to 2020.
“BPM players already invested in the Philippines will continue to dominate the Metro Manila office sector,” added Leechiu. “In the meantime, they are also expanding to provincial locations such as Clark in Pampanga, Cavite, Batangas, Laguna and notably, Cebu City.”
Citing an LPC Metro Manila absorption study, Leechiu said demand for office space from the offshore/online gaming industry is expected to grow further to 269,000 sqm in 2018, 309,000 sqm in 2019 and 356,000 sqm in 2020.
He said those from other industries is expected to reach 183,000 sqm over the next three years.
Leechiu also expects growth in the Metro Manila office sector to continue with as much as 1.2 million sqm. of office space forecasted to be added to the current inventory for this year.
He further said the Philippine office supply would grow by 40 percent in the next five years.
Pipeline supply is projected to reach 4.5 million sqm in 2018 to 2023, with 71 percent, or 3.2 million sqm of developments, will be in Metro Manila. Developments outside Metro Manila make up for the remaining 29 percent, he added.