After 2 years of struggle in the industry during the height of the pandemic, things are finally looking up in real estate. Office space occupation is expected to nearly double this year to 220,000 square meters from last year’s 110,500 square meters, with demand more quickly on the rise now. According to real estate advisor Colliers International – Philippine branch, the growth in demand is largely being driven by demand from outsourcing firms.
Colliers expects this reach of up to 220,000 sqm in 2023 due to the office space demand of the healthcare, telecommunications, logistics, finance, shared service, and government segments. Although the 2022 figure of 110,500 sqm is lower than its previous 140,000 sqm, it has been a satisfactory achievement and turnaround, coming from a negative net in the past 2 years.
While there have been concerns about the demand for office space potentially being less due to new business practices such as the hybrid work arrangement, office space requirements in Metro Manila have been showing continuous and steady increase nonetheless.
In addition, Colliers advises landlords to take advantage of the office space demand among healthcare outsourcing firms. Healthcare firms are on the lookout for high-quality spaces that are being offered at a discount. In 2022, around 23,800 sqm of office space occupation in Metro Manila came from healthcare information management services (HIMS). That’s 9% of the total office space occupation by outsourcing firms.
HIMS had taken advantage of the availability of new, high-quality spaces from 2020 to 2022. This year, the HIMS sector is expected to grow between 10 to 13 percent, according to Nora Terrado, country head of Carelon Global Solutions Philippines, an IT and business process solutions provider focused in the healthcare segment.
Landlords should be active in monitoring demand from HIMS, since many are looking to expand and occupy office space, both within and outside Metro Manila, advises Colliers.
As for new supply of office space, around 641,100 sqm is projected to be added in Metro Manila this 2023, with almost half of the new spaces to be supplied in Quezon City and Ortigas central business district.
Lastly, vacancy levels should increase to 20.2 percent this year due to the additional supply of office spaces. However, new supply is expected to slow down and return to pre-POGO (Philippine Offshore Gaming Operators) levels of 555,000 sqm annual average.
All in all, office real estate recovery is well under way this 2023.
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