Office leasing down as more workers opt to work from home

Office leasing down as more workers opt to work from home

THE growing popularity of hybrid and flexible work arrangements is expected to slow down office leasing activities.

In an interview, Joey Roi Bondoc, research director at Colliers Philippines, said “flexible work arrangements will likely result in slower takeup of traditional office space.”

Such work setup had already been used in the past, but when the Covid-19 pandemic lingered for more than three years, it amplified the desire of workers for a flexible working setup in the post-pandemic working environment.

Business leader and entrepreneur Steven Yu said companies were able to save on operational costs after being forced to shift to a work-from-home setup.

And now with the increasing inflationary pressures, Yu said work-from-home employees realized significant reductions in food and transportation expenses, and they get to have more time for family and other chores.

“This led to increased personal fulfillment and also translated into gainful work productivity. For jobs which can be relegated to remote work options, choosing remote work seems to be a win-win situation and the better choice,” said Yu, former president of the Mandaue Chamber of Commerce and Industry.

A recent survey commissioned by Cebu-based job portal revealed that remote work now ranks fourth among the reasons for the increase in employee work happiness and engagement.

This number has gone up from last year’s No. 8 ranking, highlighting the growing trend of remote work in Cebu. The survey was participated in by 4,500 Cebu-based respondents.

“Cebuanos are realizing the value of working from home to save time and money, as public transportation fares have gone up and commute time has increased compared to last year,” Wesley Chiongbian, chief executive officer of, said in a statement.

Information technology and creative industries are among the fields most suitable for remote work due to the availability of digital technologies and the digital nature of the work involved.

Remote work in the marketing and creative industries is also gaining popularity among digital marketers, graphic designers, writers, social media managers and content creators, among others.

“The future of work will impact office leasing activity. Hybrid is now a non-negotiable element of the workplace ecosystem,” said Lizanne Tan, JLL Philippines’ head of Office Leasing Advisory, in a statement.

The Mynimo survey noted that one of the major advantages of remote work is flexibility.

Employees working under this setup can set their own schedules, allowing them to find work-life balance.

Another reason for the rise in the popularity of remote work is the increase in self-employment rates.

The job market study found that self-employed individuals in Cebu have increased from two percent to five percent this year.

This increase indicates that more people are opting for freelance or contract work instead of traditional employment.

With the rise of the hybrid work setup, Sugbo Mercado, Cebu’s outdoor dining concept, initially experienced a decline in sales and reduced foot traffic in its branch in Cebu IT Park, one of the business districts in Cebu City that hosts a number of IT-BPM firms.

“That used to be the case, but we have since breached our former average of 5,000 persons per night to 6,000 and up over weekends nowadays,” said Michael Karlo Lim, marketing director of Sugbo Mercado, adding that the easing of Covid-19 restrictions and the return of most workers gradually brought their patrons back.

Office deals in provinces

Latest Colliers Philippines data showed that office deals in the provinces declined in the first quarter of 2023. Colliers recorded 29,200 square meters (314,200 square feet) of transactions during the quarter, 37 percent lower than the 46,300 square meters (498,200 square feet) posted a year ago.

Cebu continued to dominate in office deals in the provinces, followed by Pampanga, covering 55 percent and 36 percent of total provincial transactions, respectively.

Colliers projects takeup for flexible workspaces to be driven by traditional occupiers engaged in construction, architecture, logistics, financial technology as well as startup companies.

“The office leasing market has been relatively stable despite headwinds,” Janlo de los Reyes, JLL Philippines’ head of Research and Strategic Consulting, said in a statement.

Data from JLL Philippines showed that leasing activities in Metro Cebu are sustained despite unfavorable business conditions, with 43,664 square meters in the fourth quarter from 41,853 square meters in the third quarter of 2022.

Offshoring and outsourcing continued to lead the transactions in Metro Cebu at 87 percent followed by flexible workspace at 13 percent.

Cebu as expansion hub

Colliers Philippines believes that Metro Cebu remains one of the most attractive expansion hubs for business process management (BPM) in the Philippines.

About 70,000 jobs in IT-BPM were generated in Cebu, Davao, Pampanga, Bacolod and Laguna last year.

The increase in employee count may be attributed to the growth in the banking, financial services, healthcare, technology, retail and telecommunications sectors.

While vacancies remain elevated, Colliers said expanding BPMs are likely to occupy more traditional office spaces.

“We still see opportunities for flexible workspace operators. We still see a tenant-leaning market, and this should provide an opportunity for firms (both BPMs and traditional/corporate firms) to haggle for rates,” said Bondoc. Tan said “location decisions will gravitate towards places where people can socialize, shop, live, work and eat, and that tenants will prioritize markets with a strong talent pool to accelerate innovation.”

“Landlords and tenants should remain aggressive in coordinating with local ICT councils, local government units, and academic institutions to address skills mismatch in Cebu and ensure that the city’s graduates are more than ready for higher-value outsourcing services especially amid the rise of artificial intelligence,” said Bondoc.

He added that while Cebu is already popular for the more sophisticated outsourcing jobs, other cities such as Iloilo, Bacolod, Davao, and even Clark are also catching up.


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