MEGAWORLD Corp. said it can hit its 1-million-square-meter target for its office spaces by the end of the year. The property-development arm of businessman Andrew Tan continues to be bullish about expanding its office portfolio amid concerns that demand may decline as business-process outsourcing (BPO) firms turn to automation and artificial intelligence (AI).
“There is no reason to slow down our office developments,” Megaworld Senior Vice President Jericho Go told reporters on Monday. “The demand for office spaces in our townships continues to grow, and we will continue to build in order to meet our clients’ growing requirements.”
Go said the company will be the first developer in the country to reach 1 million sq m of office-space inventory by the end of the year as they expect to complete a total of 150,000 sq m this year.
In terms of revenue, Megaworld expects to gain some P7.2 billion in revenues from office alone this year. Including the shopping malls it operates, the company may earn some P12 billion.
Currently, Megaworld has a total office stock of 888,500 sq m and another 111,500 sq m of fresh offices will be completed before the end of the year in McKinley Hill in Taguig, Southwoods City in Laguna, Davao Park District and Iloilo Business Park.
Go said demand for Megaworld’s office space remains strong, adding that BPO firms still prefer to set up their offices in central business districts in the country due to the availability of skilled workers.
“While there is not much space left in Makati and Ortigas central business districts [CBDs] there remains a lot of undeveloped land in in the Fort Bonifacio CBD, and Megaworld has the biggest land bank in this area,” he said.
Megaworld has about 100 hectares of land in the former military facility, and Tan’s firm only managed to develop half of its land.
While automation and AI may threaten lower-value jobs, many BPO firms are training their staff to upgrade their skills for higher paying jobs that require more human intervention, such as data analysis.
“What’s good about this is that these jobs will require more space compared to the simpler BPO tasks, and our tenants will thus have to expand,” Go said.
Megaworld is now able to command a premium in lease rates, which now amounts to more than P1,000 per sq m, from last year’s rate of about P850 per sq m, because of their location, and most of their townships in urban areas are already certified to enjoy incentives as information-technology (IT) parks from the Philippine Economic Zone Authority.
“Aside from BPOs, we also see growth in traditional offices, as well as back office and support offices and facilities providers for online gaming operators,” Go revealed.
To date, around 80,000 sq m of the company’s total office inventory has been leased to Philippine Offshore-Gaming Operators (Pogos) that need work spaces for their back office and support operations, such as IT and technical support, customer service and financial services.
Facilities-providers for Pogos are also leasing spaces, allowing them to sublease so-called ready offices equipped with the required work-space setup, supplies, furniture and fixtures for these operators.
“We are the first, if not among the first, to see the potential of this segment in office rental. Our expertise in office development allows us to efficiently cater to the needs of Pogos,” Go said. “While only 8 percent of our total inventory caters to Pogos, we continue to see a bright spot for growth in this segment.”