BPO demand to lead In office space shortage
Malaya by Irma Isip, 03-27-2014
Property services firm KMC MAG Group sees a shortfall in
available office space this year due to strong demand by the
information technologybusiness process outsourcing (ITBPO)
KMC MAG said the employment generated by the ITBPO sector will
push annual take up of office space to 400,000 square meters but
the additional office space that would be available this year is
only 320,000 sqm or a shortfall of some 80,000 sqm.
The Group said this shortage is expected to translate to an
increase in rentals, with the growth driving cur rent rental
prices to prefinancial crisis levels.
The growth in the ITBPO sector will also remain to be a major
influence in the serviced office market, with at least three new
serviced office centers opening to keep up with the demand for
"We expect more ITBPO companies to come in and invest in the
country, due to its young, educated, Englishspeaking labor force,
affordable labor costs, and taxation benefits for investors," said
Michael McCullough, managing director of KMC MAG Group.
"The consistent growth in the ITBPO industry has driven demand to
the extent that developers are confident in building without
"Premium and Grade A office market to keep up its current pace and
increase rental by 7% in 2014, as the BPO industry stays highly
active. With an uncertain global economic recovery, firms will
continue cutting their balance sheets that will result in an
increase of headcount in outsourcing destinations, leading to
strong demand in Metro Manila," KMC MAG Group said in its
In Metro Manila, the three top business districts con tinue to
experience activity in both residential and office sectors. Makati
and Bonifacio Global City continue to attract multinational
corporations, ITBPO companies, and entrepreneurs, as well as the
highend and luxury residential sector, with Bonifacio Global City
having the highest takeup in 2013.
"In Makati, vacancy rate in the office sector is temporarily high,
but the demand created by shortage in prime office space can absorb
the vacancy," shares McCullough. "Meanwhile, in Bonifacio Global
City, the vacancy rate is expected to lower due to the strong
demand, despite the continued expansion in its inventory."
Ortigas is shaping up to be a potential BPO hub, given its
accessibility to labor from nearby areas such as Pasig, Quezon
City, San Juan, Taguig, and Marikina.
"Ortigas has the lowest vacancy rate among all of the business
districts; however, we expect this to change because of the new
supply," says McCullough. "Among the business districts in Metro
Manila, Ortigas also has the lowest average rate for Grade A office
space, which can make it an attractive location for ITBPO
companies looking to invest in the Philippines."