IT-BPM leasing fuels Philippine office market recovery in 2024: LPC
MAKATI CITY, PHILIPPINES — The information technology and business process management (IT-BPM) industry played a crucial role in driving the recovery of the Philippine office leasing market in FY2024.
According to Leechiu Property Consultants’ (LPC) Full-Year 2024 Philippine Property Market Report, the office market recorded 1.1 million square meters (sq.m.) of transacted deals. This represents a 4% year-on-year increase and marks the highest transaction volume since the pandemic began.
Despite challenges such as high inflation, rising interest rates, and the ban on Philippine Offshore Gaming Operators (POGOs), the market demonstrated a steady recovery. The IT-BPM sector emerged as a key growth driver, reinforcing its position as a cornerstone of the country’s office leasing activity.
IT-BPM companies drive demand for larger office spaces
IT-BPM firms accounted for significant leasing activity, with most transactions ranging from 1,000 to 5,000 sq.m. Notably, 10% of deals exceeding 1,000 sqm were driven by new market entrants, highlighting sustained global interest in the Philippines as a prime outsourcing hub.
The sector’s demand underscores its critical role in stabilizing the office market amidst ongoing economic challenges.
Metro Manila and Cebu lead leasing activity in 2024
Metro Manila dominated office leasing demand, with 881,000 sq.m. of transactions recorded. The Bay Area emerged as the top-performing district due to government relocations and expansions. Bonifacio Global City (BGC) also gained traction among IT-BPM firms for its modern facilities and strategic location.
Outside Metro Manila, Cebu led provincial markets with 113,000 sq.m. of leased office space, representing nearly half of all provincial demand. Market consolidation trends shape IT-BPM leasing strategies
While net demand fell by 35% compared to last year due to POGO-related contractions, IT-BPM firms largely opted for consolidation or relocation instead of downsizing.
Transactions above 1,000 sq.m. accounted for 75% of overall market activity, reflecting a preference for larger office spaces among major tenants.
Grade B buildings under 10 years old remained the top choice for IT-BPM companies and other sectors alike.
Optimistic 2025 outlook for IT-BPM office demand
Looking ahead to 2025, live office space requirements have already reached 494,000 sq.m. by year-end. Over half of this demand is driven by third-party IT-BPM vendors.
The government is also seeking an additional 71,000 sq.m. for expansion efforts. Metro Manila remains the primary target for tenants, with BGC emerging as a preferred location due to its premium offerings.
Long-term recovery on track
Despite current challenges, such as elevated vacancy rates and POGO-related contractions, the Philippine office leasing sector is projected to stabilize by 2027.
Mikko Barranda, LPC Director of Commercial Leasing, highlighted the market’s trajectory, stating, “Although vacancies remain elevated at 18%, supply and demand trends indicate that the market is shifting toward equilibrium, with clearer signs of recovery expected by 2027.”
