Office landlords withstand mandatory Pogo exodus
The forced exodus of Philippine offshore gaming operators (Pogos), once one of the main drivers of real estate demand, did not shake the office property market in the first quarter.
Leechiu Property Consultants Inc. said in its first quarter 2025 Philippine Property Market Report released on Tuesday that demand for office space had increased by 7 percent during the January to March period to 355,000 square meters (sq m).
Vacancy across the country also eased to 17 percent from 18 percent quarter-on-quarter, and to 16 percent from 17 percent in Metro Manila alone. The 1-percentage-point difference represented around 80,000 sq m of space, said Mikko Barranda, director of commercial leasing at Leechiu.
Demand was largely driven by the information technology-business process management (IT-BPM) sector, whose industry share widened to 55 percent, or 195,000 sq m, from 37 percent in the same period last year.
The sector is composed mainly of health care, banking, financial services and insurance companies, according to Leechiu.
Traditional offices accounted for 45 percent of demand at 160,000 sq m.
Pogos, meanwhile, no longer had any share. In the first quarter of last year, Pogos occupied 42,000 sq m of new office space, equivalent to 16.61 percent of the total demand.
Phaseout
Barranda told reporters on Tuesday that Pogos were gradually giving up their office spaces in compliance with President Marcos’ ban.
“[Pogos] are now at the tail-end of tapering off those spaces,” Barranda said. “We can expect that in the coming quarters, contractions will naturally slow down. There will be less space given up because they’ve given up 89 percent of the space already.”
In the January to March period, 277,000 sq m of office space was vacated, representing an 88-percent climb from the same period last year. Quarter-on-quarter, this declined by 11 percent.
Of the total vacancies, 141,000 sq m were Pogo offices. The remaining 136,00 sq m of contractions came from the IT-BPM and traditional sectors, both of which had vacated their offices mainly to relocate to better areas, Barranda said.
This year, Leechiu expects demand to rise by 16 percent to 490,000 sq m, or back to 2022 numbers, due to the tapering of Pogo-vacated spaces.
