Manila business districts office space seen to dip as BPOs move to provinces

MANILA, PHILIPPINES — The office space demand in Metro Manila’s major central business districts (CBDs) may “lose steam” as business process outsourcing (BPO) firms move to provincial sites, real property consulting firm KMC Savills said in its latest market report.

KMC Savills said, “Makati CBD and Ortigas Center are still at risk if office demand from the BPO sector loses steam in favor of provincial markets.”

The property consultant firm also noted that they have observed that BPO firms are now looking for sustainable buildings.

“With sustained outsourcing demand, greener and newer buildings will remain at the top of the pecking order,” the report stated.

Furthermore, KMC Savills said that while 2022 was a good year in terms of rebound and recovery for office real estate, they are not anticipating aggressive growth in occupancy.

“We do not see total occupancy return above 85% of office stock within our forecast horizon until 2025,” the firm said.

The Metro Manila office market rebounded in 2022 with a net absorption of around 270,900 sq. m. and a reversal from the negative take-up a year prior. More than a third of net demand was recorded in 4Q/2022 as rents continued to decline.