DEMAND for office space is seen surpassing last year's figure by year end to be led by the IT Business Process Management (IT-BPM) sector, Leechiu Property Consultants (LPC) reported on Thursday.
In a virtual briefing, the real estate services firm said they expect the office market demand to close in the 450,000 to 500,000 sqm level this year.
LPC Director Mikko Barranda said office space demand stood at 383,000 square meters (sqm) in the third quarter, which is 98 percent of the 389,000 sqm recorded in the full year of 2020.
Barranda noted that the demand rate during the quarter slowed to 92,000 sqm from 169,000 sqm amid the reimposition of stricter restrictions but the figure still stands higher than the third quarter last year.
"92,000 sqm still got transacted and completed meaning many of these tenants still pushed through with their leases," he continued.
The office demand continued to be driven by the IT-BPM industry as it accounted for 44 percent or 169,000 sqm of the total.
"They have taken space quarter-on-quarter, despite the hardness of lockdowns in 2020 and continue to do so until today," Barranda said.
In terms of location, most demand was still from Metro Manila at 75 percent or 289,000 sqm, while the provinces took up the remaining 25 percent or 94,000 sqm.
Iloilo remained the second largest demand driver after the capital region at 37,000 sqm, surpassing Clark, Laguna, Davao and Cebu.
Meanwhile, Barranda reported that there are currently 228,000 sqm of active requirements eyed to be completed within the next six months.
"We believe that about 70 to 100,000 sqm may come in the last two and a half months of the year. Most of those deals are already in their final stages and that should add up in the full year demand of 2021," he explained.
The IT-BPM sector still leads the live requirements at 57 percent or 129,000 sqm.
Office leasing contractions or terminations, on the other hand, dropped to its lowest since the second quarter of last year at 42,000 sqm.
Vacancy rate in Metro Manila is presently at 17 percent.
Barranda said Bonifacio Global City, Taguig City and Alabang are experiencing low vacancy numbers and rents, which are expected to hold.
Ortigas, Quezon City and the Bay Area, meanwhile, continued to see an increase in vacancy as it remained impacted by the exit of Philippine Offshore Gaming Operators (POGOs).
"We are seeing that they are slowly stabilizing in terms of the existing operations and with the POGO Law, with lifting of airways, hopefully, that should be enough or at least that should give or shed some light into the industry to start gaining momentum in the Philippines and taking more space again," Barranda said.