The POGO exit, following President Marcos’ directive to phase out China-focused offshore gaming companies by the end of 2024, is expected to raise office vacancies to 20.5 percent.
This will be the highest on record using data going back more than two decades, said Joey Bondoc, Colliers Philippines director for research.
The previous high was 19.3 percent in 2023, while vacancies had last reached 19 percent in 2001.
Resilient third-quarter take-up
“Even without POGOs, office demand in Q3 2024 performed better than the quarterly average of 174,000 square meters, indicating a robust demand as traditional and outsourcing companies continue to take up space, with 57 percent of these firms’ motivation for taking up space being expansion,” Colliers Philippines said in a recent report.
“This is also an indication that the POGO ban has not dampened demand from the two industry groups and may even offer them greater flexibility and choice in meeting their office space requirements,” it added.
Impact of POGO ban
POGOs currently occupy about 275,000 square meters, which is about 1.9 percent of available supply in Metro Manila.
“During its peak, around 1.3 million square meters of office space was leased out by POGOs,” Colliers Philippines said.
During the third quarter of 2024, 57,000 square meters of office space were vacated, with another 157,000 square meters expected by year-end due to lease terminations and non-renewals.
Rents stable
According to Colliers Philippines, office rental rates have normalized after peaking at P1,500 per square meter during the market’s height.
A recent poll from the property services giant also showed that the Makati central business district remains a top choice for tenants, consistently attracting multinational corporations and large outsourcing firms.
Demand from banks, government offices
Apart from Makati, Colliers also observed strong demand for offices in Bonifacio Global City.
Most of the recent office demand is coming from government agencies, banking and financial service providers, and IT companies locating in Makati CBD, Manila Bay and Fort Bonifacio.
Developers are also offering discounts ranging from 3 to 30 percent, compared to the pre-pandemic rates, even for new and high-quality office spaces.
Consider housing needs of employees
Colliers Philippines suggests that developers offer affordable housing options near offices to address workers’ concerns about long commutes and traffic congestion.
Traditional condominium units often remain inaccessible to many employees due to limited purchasing power.
It recommends that developers focus on low-cost rental options, such as dormitories.
“This approach would allow employees to live near work without incurring high transportation costs, reducing commute times and promoting a work-life balance,” it said.
Miguel R. Camus has been a reporter covering various domestic business topics since 2009.
