New office space to meet demand from BPOs, POGO

MANILA, Philippines — A pipeline of new office space all over the country is expected to meet the surge in demand coming from both the business process outsourcing industry and the offshore gaming market, according to property consultant David Leechiu.

In a presentation at the Philippine Asian Gaming Expo held in Pasay last week, Leechiu said both industries continue to grow, but the POGO industry is likely to overtake the BPO sector by yearend in terms of office space demand. POGO stands for Philippine Offshore Gaming Operations.

“There is so much more to come from this POGO industry,” he said.

However, he said that Filipinos looking for office or residential spaces to rent or buy don’t have to worry about losing available supply to the POGO market.

For office space alone, Leechiu said there is an estimated 4.8 million square meters (sqm) of office space all over the country that would rise from this year to 2023.

Of the total, Leechiu said 70 percent is expected to be developed in Metro Manila, while 14 percent is expected to rise in Cebu.

Metro Manila will thus provide 3.35 million sqm of new office space while 1.43 million will come from outside Metro Manila. 

Additional residential units are expected to be built as well in the respective new supply areas to complement the office spaces in the pipeline.

As of end-2018, the gross leasable area in the office market is already at 13.04 million sqm all over the country.

Of the total, Metro Manila accounts for 11.03 million sqm.

This year alone, Leechiu said 775,000 sqm of office space was already taken up in the entire country in the first half, with Metro Manila accounting for 86 percent or 667,000 sqm with the BPO and POGO as the top two clients.

“As of the first half, the IT-BPM industry still leads demand in Metro Manila with 244,000 sqm as against the POGO take-up of 242,000 sqm,” Leechiu said.

The offshore gaming market has been mostly penetrating the bay area office market as well as parts of Makati and Alabang in recent years.

Leechiu said the POGO industry is also projected to penetrate the Ortigas, Mandaluyong, Quezon City and Pasig office markets in the next few years.

Rental rates in the bay area where there are a lot of POGOs have risen by 80 percent over the past three years. Studio units for instance have increased to P32,000 a month at present from P18,000 in 2015 or before the POGO landscape was in place, as a result of market forces or the law of supply and demand.

In all, Leechiu said POGO contributes an estimated $219 million in office rental revenue annually and $641 million in housing rental revenue, he said.