Under-a-year office renting a growth business, says property consultant
Interaksyon.com by Krista Angela M. Montealegre, 08-29-2014
MANILA - Real estate agency KMC Mag Group sees growth in the
serviced office market, riding on the strength of the business
process outsourcing (BPO) sector.
In a briefing on Thursday, KMC Mag Group associate director
Gerold Fernando said serviced offices are gaining popularity in the
country's central business districts (CBDs) and outside Metro
Manila because of the low-risk, low-capital nature of the
"Serviced office is a new product in the real estate market.
It's basically plug and play. It came in the market because of
strong demand and it is attractive for new entrants who want to
test the market," Fernando said.
Serviced offices are ready for immediate occupancy because they
are fully fitted and furnished with a fixed cost that factors in
all possible expenses, including utilities and Internet use. Unlike
a normal lease contract that lasts for at least a year, regular
serviced office contracts can be as short as three months.
"The serviced office market is the way to go," Fernando said,
noting that Makati is home to about 12 serviced office
In the second quarter, Bonifacio Global City commanded the
highest average monthly seat rate among the CBDs at P20,350 per
square, followed by Makati at P19,250 and Ortigas at P13,200.
Fernando said BPO and knowledge process outsourcing (KPO)
operations as well as small and medium enterprises (SMEs) are
driving the growth in the serviced office market. Demand for this
concept is expected to be sustained as prime office supply in CBDs
remains low until 2016.
"Provinces such as Bulacan, Pampanga, Cavite and Laguna have
also shown that they could attract foreign investment by providing
the spaces for new enterprises to flourish. We hope that more local
governments would be inspired by their example and invest in
infrastructure, talent and even in crafting business-friendly
policies," said KMC Mag Group managing director Michael
The IT-BPO industry will continue to lead the growth in the
office leasing market with take-up expected to reach 280,000 square
meters this year.
Favorable demographics, strong macroeconomic figures and the
government's commitment to undertake reforms bode well for the real
estate sector, which is expected to continue its positive growth
trajectory in the next few years, McCullough said.