Leechiu Property Consultants announced that 109,000 square meters of commercial space had been leased in the first three months of the year
By: Tricia Ang | 15 April 2021
Demand for office space has improved in the first quarter of 2021, a property consultancy group revealed on Monday (11 April).
Leechiu Property Consultants announced in a statement that 109,000 square meters of commercial space had been leased in the first three months of the year. This is up by 22% from the 89,000 sq.m. taken up in Q2 2020, and by a whopping 68% from the 65,000 sq.m. in Q3 2020.
The increase in demand for office spaces indicates firms have been “thinking long term and are preparing to go back to the office,” noted the consulting company.
With 33,000 square meters of rental space, the information technology and business process management sector continues to hold the largest amount of rentals. However, this is a slight decrease from the 34,000 sq. m. reported in the fourth quarter of 2020.
E-commerce, which LPC chief executive David Leechiu dubbed as a “sunshine industry,” is a second runner-up, with about 19,000 sq.m. of leased spaces. This is over three times the 6,000 sq.m. of office space the sector occupied from November to December in 2020.
In a presentation, LPC also stated that Philippine offshore gaming operators (POGOs) saw no demand in the fourth quarter of 2020 and the first quarter of 2021, citing the COVID-19 pandemic, Chinese authorities’ crackdown, and the industry’s high taxes as the reasons behind it.
Prior to being given the green light to resume operations during the health crisis while complying to minimum health standards, the Bureau of Internal Revenue wanted POGOs to settle their unpaid taxes starting in April of last year. In September 2020, the Palace declared that only around 20 POGOs had met the BIR’s requirements.
Despite this, according to LPC associate director Mikko Barranda, the sector accounts for 12% (31,000 square meters), of office space set to open in 2021. Although it’s too soon to say if POGOs will stay in the Philippines, he believes that having their concerns answered will help them reaffirm their commitment to the country.
All in all, active office requirements stand at 266,000 sq.m. for the year — BPO firms comprise 33% of the demand while retail firms make up 7% of it.
“Despite the hardships the retail industry has experienced we are seeing companies adapt, innovate and commit to space in anticipation of a recovery,” said Barranda, noting the fulfillment of these requirements will push 2021 demand above 2020’s.
LPC also noted that office contractions slowed in the first quarter of 2021, falling 19% from the previous quarter. This, along with an increase in office demand, was described as a sign of “improving investor trust” by the consulting firm. The POGO sector accounted for 47 percent of the 851,000 sq. m. in office contractions made during the time, or 396,000 sq. m., followed by the IT-BPM industry at 10% or 89,000 sq.m.