THE METRO Manila office market is expected to see new entrants from the healthcare and banking sectors this year, according to real estate services and investment firm CBRE.
“In this kind of market where we’re coming off a slow year, it’s encouraging that we’re seeing new entrants into the market,” CBRE Philippines Country Head Jie C. Espinosa said during a briefing last week.
He said industries seeking office space this year include healthcare, banking, financial services, and insurance.
“They want to enter and be in spaces that are predictable, less risky for them, and where they can readily start their operations,” Mr. Espinosa noted, adding that these firms aim to start within four to six months.
New entrants in the office market would help offset spaces vacated by companies from the information technology-business process management (IT-BPM) sector and the departure of Philippine offshore gaming operators (POGOs), he added.
Around 32% of vacated spaces in Metro Manila’s office market were from the IT-BPM sector, while 31% came from POGOs, CBRE Philippines Research Head Samantha Laureola told reporters.
“Starting from the third quarter onwards, we already saw a slight deceleration in the market,” Mr. Espinosa said.
“The one thing we did not anticipate was that the IT-BPM sector would also experience a bit of a slowdown. Due to the US elections, many decisions were delayed or put off.”
The Metro Manila market ended 2024 with about 1.78 million square meters (sq.m.) of available office space, according to CBRE. Of this, 51% or 903,500 sq.m. were vacated spaces, and 49% or 880,100 sq.m. were unleased.
This translated to a full-year vacancy rate of 19.9% for the Metro Manila office market in 2024, according to CBRE.
“Most of the vacated spaces were not necessarily just from the POGO sector but also from the IT-BPM sector. They’re not leaving; they’re simply downsizing in certain locations,” Mr. Espinosa said.
“But overall, the IT-BPM sector, although there was growth, that growth was mostly flat. It did not offset the decrease in take-up by the POGOs.”
In 2024, the average take-up of office space decreased to about 1,300 sq.m. from 1,400 sq.m. a year ago, mainly due to companies’ increased preference for flexible setups, such as work-from-home.
“Companies, even traditional space takers, are realizing that there’s not much need for space anymore. Instead of having workstations or offices, they provide more collaborative spaces, meeting areas, and amenities,” CBRE Senior Director Bryan Michael David told BusinessWorld.
To ensure more office space transactions, the Philippines must bolster the skillset of its workforce to attract more demand from foreign players, Mr. David said.
“If we prepare for that, maybe we can actually capture a bit of their market share later on, which will probably improve or increase demand here in the Philippines,” he added. — Beatriz Marie D. Cruz