Q1 office space demand gets a lift from e-commerce

by BusinessWorld, 13 Apr 2021

E-COMMERCE expansion backed some recovery in office space demand in the first quarter, Leechiu Property Consultants (LPC) said.

Office space demand in the first quarter grew to 109,000 square meters (sq.m.) from the 89,000 sq.m. in the fourth quarter last year, although it remains lower than the 158,000 sq.m. in the first quarter of 2020.

Demand from the outsourcing sector declined to 33,000 sq.m. in the first three months from 64,000 sq.m. in the same period last year. Philippine Offshore Gaming Operators (POGOs) activity completely flatlined due to China’s clampdown and new tax regulations on the industry, LPC said.

But office space demand from other sectors grew to 76,000 sq.m. in the first quarter from 67,000 sq.m. in the same three-month period in 2020, which can be attributed to the e-commerce sector.

“Not all industries were affected badly by the pandemic. There are certain industries like e-commerce which have really accelerated their pace in terms of more and more people such as us in some form of lockdown have now transitioned and adapted to new behaviors and has given rise to more opportunities for these e-commerce firms to expand, not only in office but also in their warehouses” LPC Associate Director Mikko Barranda said in an online briefing on Monday.

Office space demand in the first quarter was still dominated by business process outsourcing firms at 30%, falling from the 38% share in the fourth quarter of 2020.

But e-commerce demand grew to 17% compared to the 7% in the preceding quarter.

LPC Chief Executive Officer David T. Leechiu said that the office space sector is slowly recovering without the POGO sector, noting that demand would be higher if the tax structure was not tweaked.

“We probably would have maintained the office demand from pre-COVID, from the first quarter 2020 numbers,” he said. — Jenina P. Ibañez