IT-BPM stabilizes property sector amid vacancies left by POGOs

Leechiu Property Consultancy (LPC) sees 27% higher demand in Corporate spaces as compared to the first year of 2021 amid contractions brought by global uncertainties, rising interest rates, inflation and destabilizing of the currency.

LPC also reported that the IT-BPM industry has leased 777k sqm. resulting in 48% of total demand from Q1 2020-YTD 2022 totaling 1.6 million sqm. in the middle of two years during the pandemic.

Mikko Barranda, Director of LPC for commercial leasing, said the industry was registering growth despite consistent Philippine Offshore Gaming Operators (POGO) contractions over the past two years.

“Contractions appear to have leveled off and it feels like we are back to 2016 before POGOs hyper-charged the market beginning in 2017,” also said David Leechiu, LPC CEO, at a briefing pertaining to the influx of IT-BPM sector stabilizing the Philippine office market.

“We are pleased that the Philippine IT-BPM sector continues to provide a crucial service to many firms in the West especially in times of uncertainty. Seasoned IT-BPM observers have projected the sector will continue to expand its headcount in the next few years. Even if work-from-home arrangements remain popular, we are confident they will continue to hold up the Philippine office market and economy as they have done in the past two decades,” Leechiu added.

Further, Leechiu emphasized that the last two years of the pandemic prod e-commerce apps and other technology-dependent services to surge the demand for industrial sites.

The said industrial sites served as warehousing, data centers, manufacturing facilities and distribution hubs that drove the trajectory of an estimated demand of new industrial land amassing 2.6 million sqm. to accommodate the need of the firms.

Moreover, the BPO industry is seen as the biggest contributor to the office market with 60% rate compared to traditional offices. Due to the good performance of the BPO industry in the Philippines, some investors’ attention started to look further to the countryside.

“In terms of location and how we’ve seen in the past, it’s no longer Metro Manila. The provinces or the countryside have been a large benefactor of the IT-BPM industry. You’ve seen them take 40% of the pie. There has been demand in second-tier cities namely Cebu, Davao, and Clark,” LPC Director Mikko Barranda said.

“Davao today has very good space in the market for even some looking for 10,000 sqm. would need to wait before that stock can be delivered. But we’re also seeing 3rd-tier provinces do extremely well. Dumaguete, Bohol, Roxas… Different places now are becoming a destination for opportunities for BPO to space and invest in,” he added.