US reshoring measures may raise PHL office vacancies

PROPOSED LAWS in the United States aimed at deterring the offshoring of American call center jobs could lift office vacancies in the Philippines, according to property consultants.

- By Beatriz Marie D. Cruz Reporter

"While it is still too early to assess the exact impact on real estate take-up, efforts by the US government to discourage offshoring to the Philippines may lead to higher office vacancies and will require landlords and developers to rethink their leasing strategies," Edward Gador, associate director for commercial leasing at Leechiu Property Consultants, told BusinessWorld in an email.

The proposed Halting International Relocation of Employment (HIRE) Act and the Keep Call Centers in America Act do not impose an outright ban on offshoring, but their passage may slow down demand in the country's office market, said CBRE Philippines Country Head Jie C. Espinosa.

"Our projection for overall vacancy in the market to go down to single-digit levels again - similar to how things were pre-pandemic - is contingent on the continuing growth of the information technology-business process management (IT-BPM) sector," he said in an email.

The Philippine IT-BPM industry, one of the world's top outsourcing destinations, has long been a major demand driver in the country's office market.

In the third quarter alone, ITBPM firms accounted for 42% of net take-up in Metro Manila, according to CBRE data.

"If we suffer a setback in this sector, vacancy will remain in the double-digit levels," Mr. Espinosa added.

The proposed Keep Call Centers in America Act seeks to limit federal benefits granted to companies that outsource call center jobs overseas.