The Philippine coworking market is expected to grow as International Working Group Plc (IWG) announces 17 new hybrid workspaces by 2025.
Multinational office space provider International Working Group Plc (IWG) is poised to expand its coworking spaces in the Philippines this 2025, driven by opportunities arising from the nationwide ban on Philippine offshore gaming operators (POGOs).
In a recent interview with BusinessWorld, IWG Country Manager for the Philippines Lars Wittig highlighted that the ban could encourage property developers to repurpose vacated POGO spaces for various office needs, including coworking spaces.
“The developers, landlords are right now affected by the POGOs being discontinued in the Philippines. So, there is a higher degree of urgency to reinvent your buildings so that you can attract more or different types of workspace requirements," said Wittig.
“If you had a lot of POGOs who were willing to pay premium for conventional space, you might postpone the investment into flexible workspace. But with the POGOs also gone, and with a higher vacancy rate, the landlords are now eager to make that development to the next level.”
According to Wittig, POGO operators had previously paid a premium for conventional office spaces, which often delayed landlords from investing in flexible workspace solutions. With the gaming operators gone, landlords are now eager to innovate and adapt their properties to meet evolving market demands. The higher vacancy rates are prompting landlords to bring their properties to the next level.
This shift in the market is evident in the increase in vacated office spaces. Leechiu Property Consultants reported that vacated spaces surged 65% this year, reaching 690,000 square meters compared to 418,000 square meters in the previous year. This sharp rise is largely attributed to the POGO ban.
To capitalize on these opportunities, IWG plans to add 17 new hybrid working spaces to its existing 33 locations in the Philippines by 2025. The company is also forging partnerships with local developers to strengthen its nationwide presence.
Wittig points out that the demand for flexible workspaces continues to grow, emphasizing the unpredictability of workspace requirements for companies. “Even the biggest, most traditional employers cannot predict what their workspace requirements are five years from now, even three years, or even one year from now. So, they make it permanent to go flexible… because that gives them the agility to be able to expand or the opposite.”
Hybrid workspaces are increasingly seen as a solution for improving employee productivity. By reducing the need for long commutes, these spaces help companies retain talent. Wittig noted that employers also appreciate the financial benefits of coworking arrangements.
“With us, there’s no need to invest in conventional office spaces for five or ten years, which often require significant capital investments,” he explained. “Our model provides immediate workspace solutions with zero upfront costs.”
Wittig also pointed to the potential growth in coworking spaces fueled by foreign direct investments. “The fact that we are getting closer to a free trade agreement with the EU is a big driver for foreign investors to come here,” he said. Such developments could increase occupancy in hybrid workspaces as international companies enter the market.
IWG, one of the world’s largest providers of coworking spaces, operates renowned brands such as Regus, Spaces, and HQ. The company boasts nearly 10 million customers across 4,000 locations in more than 120 countries. Its clientele includes both startups and Fortune 500 companies.
In the Philippines, IWG charges between P6,000 and P8,000 per employee per month for coworking space, though the cost varies based on specific workspace needs. On average, Philippine companies lease coworking spaces for at least ten months, with some extending their contracts for up to three to five years.
Creating a coworking space is a significant investment, with the benchmark cost estimated at $1 million (P58 million). This includes essential amenities such as Wi-Fi, meeting rooms, office supplies, and coffee makers. Despite the upfront costs, IWG aims to maintain a minimum occupancy rate of 85% for its coworking spaces in the Philippines this year.
The shift in the Philippine office space landscape comes at a pivotal moment. With the departure of POGOs, landlords and developers are reevaluating their strategies to maximize property utilization.
Read related article: PAOCC Tracks 100 Unlicensed POGOs Post-Ban
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