The closure of Philippine Offshore Gaming Operators (POGOs) will reshape the Metro Manila office market, with developers aiming to attract business process outsourcing (BPO) companies to fill the vacated spaces, JLL Philippines said in a briefing Wednesday.
It said that as POGOs exit, rental rates in areas like Pasay and Parañaque were expected to soften, potentially dropping below P1,000 per square meter a month by the end of the year from the current P1,200 to P1,300/sq. m.
“We anticipate a softening of rental rates due to increased vacancy levels. However, the impact won’t be as significant as the volume of POGO offices has decreased since the pandemic and previous clampdowns,” said JLL Philippines head of research and consulting Janlo de los Reyes.
Experts said that while office demand remained relatively weak, the focus would shift towards attracting knowledge process outsourcing (KPO) companies, specializing in financial services and other high-value sectors.
The shift may require upskilling the local talent pool and creating a conducive environment for KPOs to thrive, said de los Reyes.
He said that although the POGO exodus might lead to temporary losses for some developers, the long-term outlook remained positive.
The BPO sector continues to show growing demand, and developers are expected to prioritize attracting these more reliable tenants, particularly data centers.
Data from JLL Philippines show that in the first half of 2024, BPOs led transactions across different sectors with a 39.9-percent share, followed by corporate occupiers at 34.9 percent and internet gaming licensees (IGL) or POGOs at 25.2 percent.
Cities like Parañaque and Pasay, where POGOs were concentrated, might experience higher vacancy rates, it said.
“Definitely, there will be some losses for those developers that are exposed to POGOs. They will have to replace those tenants that they have now,” de los Reyes said.
He said the departure of POGOs presents a unique opportunity for the BPO sector to expand and diversify, contributing to the growth and resilience of the Metro Manila office market.
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