{"id":19992,"date":"2024-08-01T03:02:05","date_gmt":"2024-08-01T03:02:05","guid":{"rendered":"https:\/\/energybuzz.ph\/staging\/6915\/bpo-traditional-firms-likely-to-lift-office-market-after-pogo-exit\/"},"modified":"2024-08-01T03:02:05","modified_gmt":"2024-08-01T03:02:05","slug":"bpo-traditional-firms-likely-to-lift-office-market-after-pogo-exit","status":"publish","type":"post","link":"https:\/\/energybuzz.ph\/staging\/6915\/bpo-traditional-firms-likely-to-lift-office-market-after-pogo-exit\/","title":{"rendered":"BPO, traditional firms likely to lift office market after POGO exit"},"content":{"rendered":"
\n

By Aubrey Rose A. Inosante, <\/b>Reporter<\/i><\/p>\n

INFORMATION TECHNOLOGY and business<\/span> process management companies as well as traditional o<\/span>ff<\/span>ices are expected to pick up the <\/span>slack as Philippine o<\/span>f<\/span>fshore gaming operators (POGOs) are set to vacate o<\/span>ff<\/span>ices around the country, real estate consultants said.<\/span><\/p>\n

Colliers Philippines on Wednesday said the POGOs\u2019 o<\/span>ff<\/span>ice footprint in Metro Manila has already gone down to 489,000 square meters (sq.m.) in the <\/span>f<\/span>irst half, compared with the 1.3 million sq.m. o<\/span>ff<\/span>ice spaces occupied by POGOs in 2019.<\/span><\/p>\n

\u201cIt is still the traditional o<\/span>ff<\/span>ice occupiers and the BPO (business process outsourcing) occupiers that are still propping up the o<\/span>ff<\/span>ice market,\u201d Colliers Associate Director for O<\/span>ff<\/span>ice Services Kevin R. Jara said during a brie<\/span>f<\/span>ing on Wednesday. <\/span><\/p>\n

Of the 387,000 sq.m. transactions recorded in the first half of the year, traditional off<\/span>ices accounted for 56%, while BPO firms accounted for 26% and POGOs made up 16%.<\/p>\n

Among the top five developers, which control 33% of Metro Manila office stock, their POGO exposure is limited to less than 5% of their portfolio.<\/span><\/p>\n

Mr. Jara said the Bay Area will likely see a rise in vacancy rates after POGOs are shuttered.<\/p>\n

Last week, President Ferdinand R. Marcos, Jr. ordered a total ban on all POGOs due to its ties to illicit activities such as financial scams, money laundering, prostitution and human trafficking.<\/span><\/p>\n

\u201cBay Area vacancy may increase to a maximum of 51% if the POGOs exit this market this year and in other areas such as in Makati, we see that vacancy rates may rise to 43% if that industry indeed exits the markets this year,\u201d he said.<\/p>\n

Mr. Jara said other areas in Metro Manila are unlikely to be af<\/span>fected by the POGO exit. For instance, POGOs were not allowed to operate in\u00a0 <\/span>Fort Bonifacio.<\/p>\n

\u201cOverall, we see that the full ban may increase Metro overall vacancy rates to 22% by yearend,\u201d he said. This is higher than Colliers\u2019 original forecast of 19.1% before the POGO ban was announced.<\/p>\n

Based on Colliers\u2019 conservative estimates and partial reduction of POGO footprint in Manila, the market may still end up at a positive net take-up of 163,000 sq.m.<\/p>\n

\u201cIn the worst-case scenario, it would be a negative 154,000 square meters of net take-up for 2024. However, we see vacancy rates start to taper already by 2025 and in 2026,\u201d he said.<\/p>\n

Colliers said it projected an off<\/span>ice demand of 480,000 sq.m. for the next two years based on the assumption that there will be no replacement for POGOs.<\/p>\n

\u201cFor landlords, especially for those with POGO tenants, you may consider some strategic moves to re-market the spaces to new tenants. So those include proactively refurbishing the spaces suitable for traditional and BPO occupiers,\u201d he said, noting that POGO off<\/span>ice layouts are dif<\/span>ferent from BPOs.<\/p>\n

Meanwhile, JLL Philippines Head of Research and Strategic Consulting Jan-Loven C. de los Reyes said the firm expects the off<\/span>ice sector to move forward or focus more on BPOs since the industry has steady demand for off<\/span>ice space.<\/p>\n

JLL reported leasing volumes rose 16.9% to 383,319 sq.m. for the f<\/span>irst half of 2024. BPOs accounted for 39.9% of these transactions, followed by traditional offices at 34.9% and 25.2% for POGOs, which are now known as internet gaming licensees.<\/p>\n

Mr. Reyes said the corporate and traditional occupiers\u2019 transactions were supported by substantial take-up from government agencies.<\/p>\n

He said the ef<\/span>fect of the POGO ban on the office vacancy levels \u201cis not going to be sizeable\u201d given that the volume of POGO spaces is not as significant as before because of the pandemic.<\/p>\n

\u201cBut maybe at the city level, you\u2019d see higher vacancies, particularly for Para\u00f1aque and Pasay areas because that\u2019s where the POGOs are concentrated,\u201d Mr. Reyes said.<\/p>\n

The strong leasing volumes pulled down vacancy levels just right below the 20% threshold at 19.5% for the second quarter of 2024, due to the additional 460,000 sq.m. of off<\/span>ice space that will enter the market.<\/p>\n

For Leechiu Property Consultants, Inc. Founder and Chief Executive Off<\/span>icer David Leechiu, the BPO sector and traditional off<\/span>ices will be the ones picking up the slack left behind by the POGO sector.<\/p>\n

\u201cI\u2019m hoping that the BPO sector will start going back to the office full-time, which they can still do now,\u201d Mr. Leechiu said, noting the \u201cresistance\u201d that persists.<\/p>\n

He said that government agencies that would like to upgrade their space should seek out cheap off<\/span>ice space in Ortigas Center, Bay Area and Alabang.<\/p>\n

\u201cI think off<\/span>ice rents have fallen 50% in the last two years. With this new exodus of space, you will probably see rents come down by another 40 [or] 50%,\u201d Mr. Leechiu said.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

INFORMATION TECHNOLOGY and business process management companies as well as traditional offices are expected to pick up the slack as Philippine offshore gaming operators (POGOs) are set to vacate offices around the country, real estate consultants said.<\/div>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","footnotes":""},"categories":[1],"tags":[102,19001,14644,5942,7348,2337,252,2989,1811,842,1816],"class_list":["post-19992","post","type-post","status-publish","format-standard","hentry","category-uncategorized","tag-after","tag-bpo","tag-bworldonline","tag-exit","tag-firms","tag-lift","tag-likely","tag-market","tag-office","tag-pogo","tag-traditional"],"yoast_head":"\nBPO, traditional firms likely to lift office market after POGO exit - Energy Buzz<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/energybuzz.ph\/bpo-traditional-firms-likely-to-lift-office-market-after-pogo-exit\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"BPO, traditional firms likely to lift office market after POGO exit - 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