Office market occupancy in the Philippines is stabilizing

(First of two parts)

AFTER seven consecutive quarters of negative net underwriting, the Metro Manila OfIfthis market has Ifn finally turned a corner as Colliers recorded positive net underwriting for the Iffirst quarter of 2022.

Net take-up, which is the change in occupied space between two periods, was recorded at 26,000 square meters (m²) for the Iffirst quarter of 2022 and should reach 350,000 m². by the end of the year, a signiFicant improvement compared to annual net take-up of -274,000 m². recorded in 2021.

This means that the occupancy level has stabilized overall, with some businesses continuing to divest space, downsize and downsize, while the vacancy rate is expected to rise due to oversupply.

At the start of the COVID-19 pandemic, when no one yet knew the seriousness of the problem, Colliers’ Office Services – Tenant Representation launched The New Normal Paper Series in the hope of guidingIfMarket players how to survive the challenges of the pandemic.

CHANGING OUR WAY OF WORKING
This was the first article written and shared by our team, based on a Harvard Business Review article, “Is it time to let employees work from anywhere?

Here we discussed the beneIfbenefits of having a remote workforce, such as reduced costs, opportunities to expand talent reach, and increased productivity. With no other option since the government imposed very strict quarantine measures, the only way to carry out operations was to work from home (WFH).

Companies had to adapt quickly and adopt new measures to ensure the success of remote working. We noted that the coronavirus disease 2019 (COVID-19) pandemic could become the catalyst for change and businesses need to Iffind ways to continuously provide their products and services efIfeffectively and without compromising the health and safety of their employees, customers and communities.

SURVIVAL: A COMMON CAUSE
The second article discussed how different shareholders can soften the blow of the COVID-19 pandemic. Here we were fully aware that landlords and tenants were also affected but nevertheless called for the application of the bayanihan the mind so that theIfThis market will not bottom out.

We then projected that small businesses that occupied small spaces in office buildings were the most vulnerable. Looking at our database, we found that they occupied about 14.7% of theIfthis market, which was potentially how the vacancy could increase in a prolonged pandemic situation.

This was in addition to the expected slowdown in demand in various sectors, such as the Philippine Offshore Gambling Operators (POGO), which occupied 10% of theIfthis pre-pandemic stock.

We advised landlords to listen to their tenants and do their best to prevent them from leaving as occupancy was more important than income during this time. Low occupancy rate ofIfThese buildings meant subsidizing day-to-day operations.

On the other hand, we advised tenants to be transparent and sincere in working out a win-win situation with their landlords, not to win, but simply to survive together until the market rebounds because survival must be a common cause.

DECISION MAKING IN A VUCA WORLD
During this time when the world was becoming increasingly volatile, uncertain, complex and ambiguous (VUCA), we said it was important to “keep swimming” or we could end up worse than it is.

Here, we recommended that stakeholders apply the principles of effectuation, which is an entrepreneurial process where identifying the next best step by evaluating the resources available to achieve goals while continually balancing those goals with resources and actions. existing. These principles are used by expert entrepreneurs to help them gain control in an unpredictable environment. The five principles are:

hand bird — start with the resources and means at your disposal.

In unpredictable situations, rather than focusing on a goal, it is better to IfFirst assess the available resources and build a solution from there. These resources can be determined by asking ‘who I am’, ‘what I know’ and ‘who I know’. Once you are able to determine the resources you have, you can start creating ideas and solutions.

AFfordable loss – the future is unpredictable, so know what you are comfortable losing.

In any new business, there will always be risks. Instead of focusing on an expected return and backtracking to minimize risk, it’s better to understand how much you’re willing to lose at each stage. This will allow you to determine the efforts you are willing to undertake knowing what you risk and what there is to gain even if the result is unfavorable. This will limit your risk because you are already aware of what you stand to lose.

Lemonade — “When life throws lemons at you, make lemonade.”

The pandemic has been full of surprises and continues to be unpredictable. Despite the challenges and uncertainties, there are still many opportunities to be exploited. Instead of trying to control the results, it’s better to accept these surprises and find a way to make them useful. The current period also presents “opportunities” for businesses to find new ways to innovate (e.g. delivery and logistics services, telemedicine, teleconferencing platforms, etc.) These innovations will hopefully inspire , more companies to be creative to support the economy.

crazy duvet — work with partners who are willing to cooperate and committed to achieving the goal.

Having partners to work with you not only helps you achieve your goal, but also increases your means and resources. Of course, the goal can evolve as more ideas and resources are shared. It is still important to remember points 1 and 2, knowing what you have and the risks you carry as partners. During the pandemic, it was more important to work together, communicate, build partnerships and leverage key strengths with suppliers and customers.

Pilot in the plane — the future depends on the pilot’s choices.

In an unpredictable environment, it’s best to focus on the things that are within your control. It may be true that broad market forces determine how the future will unfold, but it is also true that the future is shaped by actions taken today.

Along the same lines, inaction can alsoffaffect future results or worse, cause additional losses. Instead of being discouraged by the unpredictability of the market, it is better to make sense of the current situation and IfFigure out what can be done within your means.

With this series of articles, our hope then was to encourage our customers and partners to continually swim in troubled waters so as not to stagnate because, in our minds, inaction and paralysis could be worse for all of us.

Thus, when we tallied the results of Ffirst quarter performance of the offithis market, we were so happy to see that the deIfThis market occupancy rate stabilized, with Colliers recording a positive net take-up.

Dom Frederick Andaya is the Principal Director and Head ofIfce Services, Tenant Representation, Colliers Philippines.

Jose C. Birney