BPOs look to other cities for growth; supply seen adequate

Posted on October 14, 2015

ALTERNATIVE locations to the main business districts are providing sufficient supply for the rapidly expanding business process outsourcing (BPO) industry, property consultants CB Richard Ellis (CBRE) Philippines, Inc. said.

Increasing rents in established districts like Makati and Bonifacio Global City (BGC) has prompted a search for other office locations around Metro Manila as well as the provinces.

“Demand for space in alternative office districts such as Alabang, Quezon City and the Bay Area is steadily increasing as rents in the key office districts such as Makati and BGC continue to go up,” said CBRE, which marked its 20th anniversary this year.

“Increasing retail and commercial developments in the aforementioned locations are making these more viable sites for new office development,” said Rick M. Santos, chief executive officer and founder of CBRE Philippines, the local arm of CBRE Group, Inc., which is headquartered in California.

As of the second quarter of 2015, Metro Manila remains one of the prime rental locations in Asia, with an average of about $32 per square foot per annum, compared with Bangkok ($30), which is not a BPO destination, according to research by CBRE.

Mr. Santos also said that secondary markets have opened up due to companies centralizing in new office space which in turn would make their old premises available to the market again.

Steadily improving infrastructure and interconnectivity and the influx of public-private partnerships in these alternative sites will drive more outsourcing companies into the country, said Mr. Santos.

The next wave of BPO hubs will spread outside the capital to places like Cavite, Pampanga (Clark), Baguio, Laguna, Cebu, Iloilo, Bacolod, Cagayan de Oro, and Davao, said Morgan Mcgilvray, director of CBRE’s corporate agency and brokerage department.

These cities’ labor markets can be tapped for BPO employment because of the convenience of staying near the workers’ homes instead of traveling to Manila for work, added Mr. Santos.

Tech companies, BPO companies, and Asian nonbanking financial companies have been the most active office demand drivers, CBRE said.

The BPO sector has been a major component of the Philippine economy, with BPO revenues growing at a swifter rate than overseas Filipino workers’ remittances, said CBRE. -- Nicolo Paolo A. Pascual