In this series, Tasos Stavrou, director of Global Business Development for Leading Real Estate Companies of the World®, discusses trends in Commercial Real Estate with members of the network’s Commercial Real Estate Think Tank. Leading Real Estate Companies of the World® (LeadingRE) is a global network of 550 top independent real estate firms, with over 200 of those firms specializing in the commercial arena.

Here, Mr. Stavrou is in conversation with Michael Mabutol, President/Managing Director of Pinnacle Real Estate Consulting in Makati City, Philippines.

The office sector is struggling with empty desks, while the industrial property market remains strong. Do you expect this to continue?  

The office sector in the Philippines is seen rebounding sooner rather than later.  There's still steady demand coming from Business Process Outsourcing (BPO) companies.  While they had shifted to blended work set up (WFH and going back to the office), they had retained their offices in anticipation of the work force going back to the office, brickss and mortar, full time. The industrial sector, on the other hand, will keep its current momentum of growth, to be continuously driven by logistics, warehousing, and manufacturing.

What strategies are landlords and businesses using to attract workers back to the office? 

During the height of the pandemic, landlords were creative and flexible to ensure that they don't lose tenants.  They gave some concessions such as rent free periods and discounts. Now that we're back to the new "normal", emphasis on health and safety has been a main focus to encourage businesses and workers to go back to the office.  Businesses, on the other hand, offered incentives to employees who'd go back to the office.  Some have been creative in their strategies, slowly shifting back to the office with a blended three or four day hybrid working programme.

How will the CRE industry respond to the global financial uncertainty, high inflation and a looming recession? 

This is the time that CRE players should be careful in terms of their plans.  Thorough studies had to be done and ensure that demand is there before expanding and developing.  Pricing and incentives would be critical as well.  We could always bank on the strong economic fundamentals during the heydays and prior to the pandemic but creativity and flexibility should be factored in this time of global economic uncertainty.

One thing that we should closely monitor is the performance of bank loans. If Non Performing Loans begin to soar, this could have a domino effect on the rest of the real estate industry especially the commercial sector, and specifically of prices.

Learn more of Pinnacle Real Estate Consulting: pinnacle.ph

Learn more about LeadingRE here: leadingre.com