Post-Pogo office space vacancy rate seen staying at 18%
Office space vacancy will likely stay at 18 percent next year as the industry struggles to fill the gaps left behind by Philippine offshore gaming operators (Pogos).
Mikko Barranda, director for commercial leasing at Leechiu Property Consultants Inc., said on Tuesday that the country’s office vacancy level would only start shrinking by 2027 as “supply and demand trends indicate that the market is shifting toward a more balanced equilibrium.”
This is set to eventually contract further to 7 percent by 2030, he added.
“Because of current conditions, there are also developers not building as much office space as they used to back in 2018 and 2019,” Barranda said during Leechiu’s year-end property market report briefing.
He clarified, however, that the rate would likely be lower for both Makati City and Bonifacio Global City, which currently have vacancy rates of 11 percent and 13 percent, respectively.
As of end-November, overall office vacancy was at 3.3 million square meters (sq m), equivalent to a rate of 18 percent.
According to Barranda, vacated spaces surged by 65 percent to 690,000 sq m. Termination of contracts with Pogos ballooned by nearly sevenfold to 274,000 sq m this year.
“That is predominantly because of all the contractions that happened this year … that is based on the mandate given by the government, and that mandate was followed,” said Barranda, referring to President Marcos’ ban on Pogos during his State of the Nation Address in July.
Still, the real estate brokerage firm noted that overall demand for office space grew by 4 percent to 1.1 million sq m this year, driven by the government and information technology and business process management sectors.
Demand from government agencies accounted for 11 percent or 122,000 sq m of the total—up sixfold as they relocated and expanded their offices.
