Since Philippine President Marcos announced a complete ban on Philippine offshore gaming operations (POGO) in July this year, a large number of gaming companies have been shutting down or relocating.
So far, about 274,000 square meters of office space have been vacated, most of which were relocated within the last two months.
According to the latest report released by Leechiu Property Consultants, Inc. on December 10, this year, the Philippines saw an addition of 690,000 square meters of vacant office space, a 65% increase compared to last year.
The total national vacant area has reached 3.3 million square meters, with an overall vacancy rate of 18%.
David Leechiu, director of Leechiu Consultants, said at a press conference in Makati City: "We did not anticipate this massive withdrawal before 2024."
Of the vacated 274,000 square meters, 50,000 square meters were due to lease cancellations, and 224,000 square meters were due to early termination of leases. This number is much higher than in 2023, when POGO only vacated about 35,000 square meters.
Most of the vacant spaces are located in the Greater Manila area, especially in the Bay Area of Pasay City, where the vacancy rate is as high as 23%. Baranda noted that the gradual relocation of some government agencies to the area has provided some support to alleviate the vacancy situation.
This year, the Information Technology-Business Process Management (IT-BPM) industry also released 200,000 square meters of office space, with relocations accounting for 92,000 square meters, scale reductions for 64,000 square meters, and vacancies due to mergers for 44,000 square meters. Traditional industries vacated 216,000 square meters, including relocations (171,000 square meters), scale reductions (27,000 square meters), and mergers (18,000 square meters).
From the demand side, this year the government sector accounted for 122,000 square meters, IT-BPM industry for 422,000 square meters, traditional industries for 492,000 square meters, while the POGO industry only accounted for 76,000 square meters.
Baranda expects that the market may still maintain the current high vacancy rate before 2025, and it will take time to gradually absorb this vacancy. He pointed out: "We expect next year's situation to be similar to this year, and real improvement may not be seen until 2027."
Following the POGO ban, the Philippine real estate market is undergoing profound adjustments. Although demand from some industries remains stable, how to reutilize these vacant office spaces remains a significant challenge for the coming years.
