THE OFFICE VACANCY rate in Metro Manila is projected to reach 20.5% by the end of the year, driven by the influx of new office space and the departure of Philippine offshore gaming operators (POGOs), according to property consultancy firm Colliers Philippines.
“We anticipate (office) vacancies to rise to 20.5% by the end of the year and end at flat net demand for the market mainly due to the POGOs exiting,” Colliers Director for Office Services Kevin R. Jara said during a briefing in Taguig City on Tuesday.
As of the end of the third quarter, Colliers data showed that office space vacancy rose to 18.6% from 18.3% the previous quarter due to space resulting from POGO lease terminations and non-renewal of pre-pandemic leases.
Mr. Jara said another 157,000 square meters (sq.m.) of POGO-occupied office space are expected to be vacated by the fourth quarter.
“These were the ones that we know and have officially notified their landlords that they’re not renewing their lease,” he said.
“57,000 sq.m. have already been vacated in the third quarter. That’s the immediate effect of the POGO ban,” he added.
POGOs, which are now officially known as Internet Gaming Licensees, were ordered shut down by the end of the year after the president announced a ban in July.
In terms of supply, Mr. Jara said Colliers is projecting an additional 119,000 sq.m. of office space by the fourth quarter.
“Then in 2025, we are expecting 615,000 sq.m. of new office stock, mostly coming in Cubao, North Edsa, and the Bay Area,” he said.
Mr. Jara said the average office rent is expected to be flat by yearend.
“It’s going to be an increasingly situational scenario for office occupiers taking up new leases. It would really depend on the building occupancy, age of the building, and portfolio situation of the landlord that is leasing the space,” he said.
Submarkets with substantial POGO exposure, such as the Bay Area, are expected to see a decline in rents by yearend.
On the other hand, submarkets such as Makati, Fort Bonifacio, and Ortigas are projected to see marginal increases in rents due to declining vacancy rates.
Mr. Jara also said the consultancy company has seen improvements in the transaction volume of office spaces led by the information technology and business process management sector and traditional office users.
“We think the market remains stable despite updates in regulation just over the past three months,” he said.
“We are still confident to see more opportunities arise, even with upcoming events in the US elections and with impending legislation such as the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE),” he added. — Revin Mikhael D. Ochave