POGOs dethrone call centers as top office demand driver

by Catherine Talavera (The Philippine Star) – 10 Dec 2019

MANILA, Philippines — Philippine offshore gaming operators (POGOs) have dethroned call centers in the information technology-business process management (IT-BPM) sector as the top demand driver of office space in the country as the diminishing supply of Philippine Economic Zone Authority(PEZA)-accredited spaces weighed in.

In a media briefing, Leechiu Property Consultants (LPC) chief executive officer David Leechiu said total Philippine office demand reached 1.7 million square meters in 2019,a six percent rise from 1.6 million sqm a year earlier.

“The biggest driver of that demand today is the POGO industry,” Leechiu said.

POGOs accounted for 44 percent or 738,000 sqm of total demand, an estimated 67 percent increase from the 443,000 sqm demand last year.

In contrast, office demand from the IT-BPM sector decreased 14 percent to 537,000 sqm from 652,000 sqm a year ago. This accounts for 34 percent of the 2019 total office demand.

Leechiu emphasized that the decline in demand from the IT-BPM sector was due to the lack of readily available office supply and a wait-and-see attitude of companies.

He pointed out that IT-BPM was at its strongest in the first half of 2019, and subsided after the issuance of Administrative Order(AO) 18 in June, which imposed a moratorium on processing on applications for ecozones in Metro Manila.

“I support the government’s plan to expand the BPO sector and job creation into the provinces outside Metro Manila. But we also have to balance that with the need of the BPO companies to expand in Manila,“ Leechiu said.

“It is not growing the provinces at the expense of Manila, or growing Manila at the expense of the provinces, there has to be a balance that we can only achieve with more dialogue,” he added.

Leechiu reported that there will only be a total of 920,000 sqm of PEZA-accredited space expected to be available in the next five years, which will be spread across 38 buildings.

He also pointed out that annual projected demand nationwide for the IT-BPM industry, which has been a driver of the office sector for more than a decade, is estimated at 600,000 sqm annually.

“Nevertheless, supply of PEZA-accredited vacant spaces in both Metro Manila and provincial locations will be extremely low in the next five years,” Leechiu said.

He added that in 2020,only 138,000 sqm of PEZA-accredited space will be available in Metro Manila, while only 79,000 sqm will be available in the provinces. Considering the projected IT-BPM demand of 600,000 sqm, this will leave an unserved demand of 383,000 sqm.

LPC said the supply of PEZA-accredited space is expected to increase in 2021, with a total of 157,000 sqm to come online in the provinces and 120,000 sqm in Metro Manila during the year.