Resilient BPOs reviving demand for office space

By: Doris Dumlao-Abadilla – Reporter, Philippine Daily Inquirer, 7 Dec 2021

The Philippine office property segment is seen to end this year on a strong note, with demand for additional office space rising by 38 percent from the level in 2020 when the pandemic disrupted most businesses, thanks to the resilient business process outsourcing (BPO) industry.

This is according to property consulting firm Leechiu Property Consultants (LPC), which estimated full-year 2021 local office property demand to reach 539,000 square meters (sq m) compared with 389,000 sqm last year.

About 42.4 percent of the demand for new office space has been driven by the IT-business process management (IT-BPM). This sector may end the year with 229,000 sq m of new office space orders, 18 percent better than the 194,000 sq m additional footprint sought in the previous year, based on LPC’s latest research issued on Monday.

Take ups from IT-BPM firms would have been higher if not for mobility issues brought about by the reimposition of tighter lockdown protocols in the third quarter, said David Leechiu, chief executive of LPC.

“Even at the height of the pandemic in 2020, IT-BPMs took up space. We foresee that they will remain a catalyst of the office segment for as long as outsourcing remains a viable solution for recovering firms in the West,” he added.

Emerging markets that serve as BPO hubs like the Philippines and India historically benefit from increased outsourcing activities in the aftermath of major crises. This was observed after the US-epicentered global financial crisis of 2007-2009, and the same thing is expected to happen as the global economy recuperates from the COVID-19 pandemic.

4th quarter growth

This fourth quarter alone, LPC estimated that IT-BPMs would reach 54,000 sq m of additional office space.

“We are pleased to be seeing new brands from among the captives looking to offshore and outsource to the country,” he said.

There are currently about 15 million sq m of office space in the Philippines. Of these, the BPO industry occupies about 8 million or 53 percent.

During this pandemic, the government allowed BPOs to have 90 percent of their staff under work-from-home arrangements without losing their fiscal incentives.

Supported by strong fundamentals, office take-up at yearend will surpass projections despite the peaks and dips in demand that characterized the 2021 office arena, LPC noted.

Other than BPOs, LPCs expect online retail companies or e-commerce platforms to continue driving growth and expand both office and industrial requirements. The study also noted surging demand for industrial and warehousing to meet logistics requirements. INQ

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