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Market Intelligence | Philippines May 6, 2022

Eton Properties, Residential real estate, Office real estate, Eton City Square, IT-BPM, Hybrid work

This week, Colliers Research provides insights on Eton Properties’ plan to expand its commercial and residential portfolio this year, and the results of an IBPAP survey showing that majority of IT-BPM employees prefer hybrid work model.

Eton to ramp up office, commercial portfolio this year

SUMMARY

Eton Properties Philippines is planning to expand its office and commercial portfolio this year. Eton Properties executive director Kyle Tan said the firm “aims to activate some of its raw land across the country that have good potential for development.” The developer intends to launch the Eton City Square in Sta. Rosa, Laguna, in Q2 2022. Its 36-storey Blakes Tower in the Makati CBD offers 11,500 square meters (123,800 square feet) of leasable office space. It also has 11 floors for residential units. Eton said it is “on momentum” to continue its goal of expanding its leasing portfolio.

RESEARCH VIEW

Colliers saw office net take-up in Q1 2022 reaching 26,400 square meters (284,200 square feet), a turnaround from the –130,1000 square meters (–1.4 million square feet) in Q4 2021. This indicates that the office market might have turned a corner as we recorded the first positive net take-up after seven consecutive quarters of negative net absorption. Meanwhile, we recorded about 146,100 square meters (1.6 million square feet) of office transactions in Q1 2022, up 30% YOY. In our view, traditional and outsourcing firms are still likely to lead take-up in 2022. Colliers believes that firms’ return-to-office (RTO) plans should support recovery in office space absorption. Based on our Q4 2021 Office Survey, about 67% of respondents said that their companies are already implementing RTO. Additionally, 13% of respondents answered that their companies are planning to return-to-office between Q2 2022 and Q4 2022.  We encourage developers and landlords to adopt green and sustainable offices, and highlight health and safety features of their buildings. From 2022 to 2025, we project that about 35% of the new office supply in Metro Manila will have green building certifications. Tenants, meanwhile, should continue to plan ahead and leverage on market conditions by implementing early renewals.

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More BPO workers prefer hybrid: poll
   

SUMMARY

A new survey conducted by the Information Technology Business Process Association of the Philippines (IBPAP) showed a higher proportion of employees preferring hybrid work. Based on their Employee Sentiment Survey in March, about 83% of respondents prefer a combination of on-site work and work-from-home (WFH), up from 60% in February. Results from the poll also showed that 88% of the employees are more productive in a hybrid model. IBPAP President, Jack Madrid, said that “this new (hybrid) work model is emerging as the preferred model for the IT-BPM industry and I suspect other industries as well. Before the pandemic, we were very comfortable working on site in the office but in 2020 and 2021, we learned how quickly we can adapt to this.” Madrid stated that the hybrid work set-up will be a high likelihood in the industry’s new normal.

RESEARCH VIEW

Based on our Q4 2021 Office Survey, 48% of the respondents said that their companies are still implementing a hybrid model with 25% to 74% of their respective workforces now required to report on-site. On the other hand, the Philippine Economic Zone Authority (PEZA) has granted the extension of outsourcing firms’ work-from-home (WFH) arrangement. PEZA has now allowed registered outsourcing companies to implement a 70% on-site and 30% WFH arrangement until September 2022. Colliers recommends that occupiers determine the future-of-work that fits their organization. Tenants that will continue to implement a hybrid work set-up and still in wait-and-see mode may opt to relocate to smaller office spaces or flexible workspaces, and explore short-term leases. Meanwhile, we encourage landlords to partner with flexible workspace operators to provide additional fitted spaces or offer short-term contracts for vacated office spaces.

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