While the ban on Philippine Offshore Gaming Operators (POGO) has garnered attention for contributing to office space vacancies in Metro Manila, CBRE analysts say it’s not the primary driver of the increase in empty office spaces.
The main factor is the downsizing and relocation of IT-BPM (Information Technology and Business Process Management) companies.
According to the Real Estate Market Monitor by CBRE, office space vacancy in Metro Manila rose to 19.9 percent in 2024, translating to nearly 1.8 million square meters of available office space. Of this, 51 percent consists of vacated spaces, while 49 percent remains unleased or unrented.
Although the POGO ban, which took effect at the end of 2024, has caused some companies to vacate their office spaces, it accounts for only 31 percent of the vacancies.
In contrast, IT-BPM companies account for the largest portion of vacated spaces, at 32 percent. While POGOs faced a ban and increasing regulatory scrutiny, the more significant factor behind the rise in office space vacancies is the restructuring within the IT-BPM sector.
According to ABS-CBN News, Jie Espinosa, Country Head of CBRE Philippines, clarified that the vacated spaces are primarily from IT-BPM companies, who are downsizing or relocating to smaller spaces.
Espinosa added that many IT-BPM companies have moved based on client preferences or chosen smaller offices. NEO, a major office developer in Taguig, reported a slowdown in the office sector and is working to foster a sense of community to encourage employees to return. Raymond Rufino, CEO of NEO, acknowledged the challenges facing the office sector, noting it’s a tough time for the industry, whether perceived or real.
Carlo Rufino, NEO’s Co-Managing Director, noted that their main competition is the work-from-home trend. He mentioned that the company is organizing activities for tenants and their families to encourage office attendance and highlight the value of in-person interactions.
Despite the high vacancy rate, rental fees have not dropped significantly. Espinosa explained that some building managers are offering incentives, such as rent-free periods, instead of reducing rent.
However, CBRE remains optimistic that the 19.9 percent vacancy rate will decrease by year-end. Espinosa added that the US elections last year delayed decision-making, but with that now behind them, US firms have begun inquiring about office spaces in the Philippines.