THE exit of Philippine offshore gaming operators (POGOs) will contribute 650,000 square meters (sq.m.) of vacant office space but can be offset by transaction activity and demand take up, Colliers Philippines said.
“We need to move on from POGOs for the office sector. I think half of them have already left the country. The current contribution of POGOs to total office stock is just 5%,” Colliers Associate Director Kevin Jara said in a briefing on Thursday.
“That’s around 650,000 sq.m. of office space. So, about half of the original POGO space in stock has already left and vacated those spaces,” Mr. Jara added.
According to Colliers’ report, the overall office vacancy rate in Metro Manila as of September increased to 17.7% from 15.7% a year ago, translating into 2.4 million sq.m. vacant office stock excluding strata-titled buildings.
In nine months to September, the total office stock totaled 13.4 million sq.m.
“Currently, we have about 2.4 million sq.m. of office space and if we assume 400,000 sq.m. of non-POGO office demand, it will still take around five years [for the non-POGOs] to fully absorb those,” Mr. Jara said.
“If POGOs fully leave, that will just add about 650,000 sq.m. to the 2.4 million sq.m. available office space, so around 3.1 million sq.m. office space,” he added.
Mr. Jara said adding the office spaces that will be contributed by the exit of POGOs will take six to seven years to cover up the total office stock. However, Mr. Jara identified two reasons why the office market should not be afraid of the exit of POGOs.
“[First,] right now we are experiencing quarterly sustained transaction activity; number two we are going to admit positive demand take-up and we have done that even without POGO transactions,” Mr. Jara said.
“So, I would say [the office sector] is not going to collapse even if there is a full ban for POGOs because the exposure is very low,” he added. — Justine Irish D. Tabile