OFFICE LEASING in the Philippines shrank by 35.7% to 72,000 square meters in the third quarter from a year earlier amid a coronavirus pandemic and uncertainties posed by elections next year, according to JLL Philippines.
The extension of the work-from-home setup in many companies had mainly caused the contraction, Janlo C. de los Reyes, research head at JLL Philippines, told an online news briefing on Wednesday.
“A lot of occupiers are still uncertain about how their work environment will be in the next couple of years,” he added.
Office leasing decisions had probably been pushed back until later this year or next year, Mr. De los Reyes said.
Recovery is still expected because the Philippines remains one of the “best outsourcing destinations,” he said, without saying when the rebound would come.
There was growth in suburban office real estate, JLL Philippines Vice-Chairman Joey M. Radovan said, adding that property developers had brought these projects to the broader labor communities before the pandemic. “That is a long-term bright spot.”
Infrastructure projects outside Metro Manila could also be a growth source for office real estate, he added.
Meanwhile, JLL expects a growth in the industrial and logistics market to slow between now and in the first half of next year.
Foreign investors would probably adopt a wait-and-see approach leading up to the May 2022 elections in case of policy changes that could affect investment decisions.
“We might see a bit of uptick as we move into the third quarter of next year as we have more clarity in terms of the political landscape and, hopefully, COVID cases will have been managed,” Mr. De los Reyes said.
JLL said seat utilization or the physical occupancy of an office space could be used to measure the growth of the office market. Companies are expected to keep physical offices despite remote work arrangements.
A benchmarking report by the global arm of JLL found that some of the key employee drivers to return to the office include missing informal social interaction of an office setting, attending scheduled meetings at the office, improving focus on work and access to information and office technology.
“Hybrid workplace between office and home — it’s going to be there — but not a lot of companies are really going to get rid of the physical space,” Mr. Radovan said. — Keren Concepcion G. Valmonte