MANILA -- A bill seeking to amend the country's corporate tax perks may reduce the office space vacancies, a real estate services firm said on Tuesday.  

The Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) bill, which was passed by the Senate on final reading in September, is seen to help address high office vacancy rates in Metro Manila.

The bill includes a provision that requires Philippine Economize Zone Authority (PEZA)- registered enterprises to have 50 percent of their operations back on-site, from having switched to remote work arrangements during the COVID-19 pandemic. 

In a briefing by JLL on Friday, the real estate services firm said this could reduce office vacancy rates by up to 70 percent once enacted.

“There will be increased take up coming from those that are prompted to return to the office so they will need significant space. Because what they have done for the past couple of years is downsize or rationalize their spaces and a lot of these BPO companies have increased their headcount for the past couple of years, even during the pandemic,” said JLL Head of Research and Consultancy Janlo Delos Reyes, which he noted are mainly Business Process Outsourcing (BPO) firms. 

Delos Reyes said this would also ease some of the supply pressure that the office market will be facing over the next three years. 

“We’re seeing around 1.1 million square meters of new office space over the next couple of years. These have low pre-commitment levels, meaning low take up. Once they become online, that most definitely apply supply pressure in the market,” he explained. 

Even without that volume of stock yet, JLL projects office vacancy in the National Capital Region to rise to nearly 20 percent by the end of 2024. 

Delos Reyes said that while there has been an increase in take up from the BPO sector and government agencies for the first nine months of the year, which reached around 500,000 sqm, moveouts have also been significant. 

“We saw around 129,000 sqm of released spaces in the third quarter alone, bringing the total to 271,000 sqm in the first 9 months of the year,” he said.

“This is underpinned by the rationalization of spaces by office occupiers as they continue to act on their office strategy for the short to medium term,” added Delos Reyes. 

Meanwhile, JLL is anticipating a happy Christmas for the retail market. 

“The retail market remains stable for the third quarter of this year, behind sustained store openings… We expect this trend to continue for the fourth quarter of this year, as retailers open shop to take advantage of the holiday season,” he said.

Higher tourist arrivals over the holidays is also seen to benefit the hospitality segment.

“We anticipate sustained, strong rebound for hotel demand in the next couple of months… increase as we see more leisure and business tourists visit the country by year end for basically for vacation and also for business trips,” he said.