Office space demand shrinks as tenants eye short-term lease

CEBU, Philippines — Demand for office spaces continue to contract, as tenants are now exploring short-term lease renewals.

An industry forecast released by Colliers International Philippines, indicated that landlords in the office leasing sector should implement a different strategy, or offer more enticing leasing packages considering that working lifestyle has changed.

Aside from shorter lease renewals, companies now are also exploring alternative models such as hub-and-spoke—the opening of satellite offices near residential communities to support those who are working from home.

These changes have created further challenges to office space landlords around the country. However, this can be given solution by offering attractive offers and innovations.

Colliers suggested that landlords should highlight the importance of traditional office space in promoting collaboration and corporate culture.

On the other hand, Colliers also noted that landlords have become more considerate to tenants’ requests.

With net office take up likely to turn negative for the rest of the year, Colliers retains its forecast of a 17 percent correction in lease rates in 2020.

The firm encourages landlords to continue to be more responsive to tenants’ immediate office needs and offer available PEZA accredited spaces.

To tap pent up demand, developers should continue to offer flexible payment terms and adopt property technology (proptech) platforms. These include virtual reality (VR) tours and automated communication platforms for tenants and property management providers.

Developers that held off new launches in 2020 that are planning to recapture demand in 2021 should consider price segments and locations that remained attractive during lockdown.