15,000 Flexible Office Seats to Facilitate Q4 2020 Business Resumption

October 12, 2020

 

Tan, Frankum and Associates, Inc. (TFA) registered a 98% increase of available flexible workspaces in six major central business districts (CBDs) of Metro Manila equivalent to 14,835 seats in Q4 2020 compared to 7,481 seats in Q1 2020. The movement restrictions and the temporary shift toward a work-from-home set-up following the upsurge of Covid-19 cases in the National Capital Region combined with the increase in supply resulted in a 23% drop in seat occupancy for Q4 2020.

 

Makati City and Bonifacio Global City (BGC) are at the top of the list of CBDs that have the greatest number of seats, and are evidently the most affected from the pandemic-induced quarantines. Specifically, vacant seats in Makati City grew by 337% (5,332 seats), while BGC’s vacant seats up-ticked by 92% (4,661 seats).

Ayala Tower 2 is the newest building to house flexible workspaces, which will come online by Q1 2021. TFA has so far noted only a minimal number of providers who have gone out of operations.

 

In terms of building grade, BGC houses the most available flexible workspaces in Grade A buildings at roughly 3,600 seats available for Q4, followed by Makati CBD with 2,400 available seats, and Ortigas with about 2,000 seats. On the other hand, businesses that prefer to locate in Grade B buildings should be able to find from a pool of about 2,700 seats available in Makati CBD, around 1,300 seats in Ortigas, and 1,000 seats in BGC.

 

TFA has seen the demand for flexible workspaces to be largely affected by Covid19-induced factors. Once popular to small companies and POGOs because of space adaptability and ability to take short term contracts, TFA’s Office Services Analytics have noted that most occupants in the flexible office market have been reluctant to share workspaces since Q1 2020 to avoid Covid-19 infections, prompting companies to shift operations to work-from-home set-up. Moreover, the global impact of pandemic to market demand in some industries have also led companies to restructure their budget allocations towards the year-end, citing low financial liquidity since the first quarter and, hence, turning towards telecommuting from home.

 

The reduction of POGO operations have also contributed to the increase in availability of flexible office spaces, especially in Makati City. Prior to the pandemic, POGOs have been one of the drivers of flexible workspace occupancy until the continued increase in Covid-19 cases, which stirred fear from these Chinese businesses.

 

With the gradual opening of some industries, TFA anticipates growth in flexible spaces to slowly pick up by the end of 2020 and gain considerable traction by early 2021 should the number of infections in Metro Manila pacify.

 

Flexible office spaces should remain popular to businesses looking for temporary office locations while testing the waters before contracting for full office space tenancy and while staying vigilant to the developments of Covid-19 management in Metro Manila