METRO Manila locators continue to take up the majority of the national office space inventory as they used almost three-fourths of the record-high 1.5 million square meters (sq m) of workspace throughout the Philippines, an industry veteran bared on Monday.
Demand in the metropolis increased by 27 percent to 1.16 million sq m by December 2018, from 910,000 sq m by the end of last year.
This included commitments already made by business-process outsourcing (BPO) companies as they struggle to compete for limited spaces accredited by the Philippine Economic Zone Authority (Peza) due for completion next year.
Of the total office space supply, Clark Global City accounted for 156,000 sq m; Cebu, 133,000 sq m; Laguna, 46,000 sq m; and Davao City, 28,000 sq m.
“We’re seeing continued growth outside Metro Manila—which is a positive development. At the same time, we are seeing a slowdown of BPO demand, which continues to be the largest single industry contributing to demand and a key driver of the economy,” Leechiu Property Consultants CEO David Leechiu said.
The top executive cited a slowdown in the tenancy of the information technology-business process management (IT-BPM) industry from 485,100 sq m in 2016 to 289,819 sq m in 2018, “which is a disturbing 40-percent drop.”
Nevertheless, today’s opportunities for sustaining the interest in the Philippines, including Metro Manila, of IT-BPM players cannot be ignored.
These include the rising labor cost in the United States and the diversification of a number of global companies in the country.
“Why let these opportunities pass,” he said.
The sluggish demand from the IT-BPM sector in the past year, however, has been filled up by offshore gaming and flexible workspaces, he said.
Helping fill the void, he added, were the multinationals and local businesses upgrading to newer and better-equipped offices, which collectively took 322,000 sq m of the demand. Leechiu is bullish on future prospects. He sees land prices in Clark, Cavite, Laguna and Batangas appreciating in the next three years.
“The completion of eight projects totaling 665 kilometers of roadway will make 2021 a milestone year in infrastructure development. New transportation arteries will spur growth in rising regional centers in these key areas,” he said.
To date, nearly half of the upcoming stock in Bonifacio Global City and surrounding areas has already been pre-committed “as competition for Peza accredited space tightens,” Leechiu said.
Set to be finished by the end of 2019, Century Diamond Tower is the only building with Peza accreditation in Makati as of this time, he said.
Because no other building with Peza incentives is due for completion in the next three years, a sharp decline in office supply is projected.
“We see a deficit by 2021,” Leechiu said, while encouraging developers to complete new projects by that time and beyond.