TRADITIONAL and non-outsourcing firms is fueling demand for office spaces anew, according to Colliers International Philippines.
“We see the sustained macroeconomic growth boosting the office space demand of the non-outsourcing occupants, particularly construction, insurance, and flexible workspace operators over the next three years,” Colliers said in a statement.
The real estate consultancy services firm said that non-outsourcing locators, which include engineering and construction firms, multinational corporations, government agencies, and flexible workspace operators have been expanding their presence in the country over the past 24 months. This is in addition to the continued expansion of business process outsourcing (BPO) companies, knowledge process outsourcing (KPO) companies, and the offshore gaming firms from China.
“Developers should closely observe this non-outsourcing segment given the growing leasing opportunities. In Q1 (first quarter) 2019, the segment covered 35% of transactions or 116,800 square meters (sq.m.) (1.3 million square feet),” Colliers said.
While outsourcing companies prefer office spaces accredited with the Philippine Economic Zone Authority (PEZA), Colliers noted the non-sourcing firms are indifferent to the availability of PEZA-proclaimed spaces, with their expansion dependent on the country’s economic growth.
For engineering and construction firms that are taking part in public infrastructure projects, Colliers recorded that these firms took up 14,000 sq.m. in the first quarter of 2019 in Makati, Quezon City, and Fort Bonifacio.
“The government intends to double its infrastructure spending to about 6% of annual GDP or P1 trillion ($19 billion) per year from 2019 to 2022,” Colliers said, further noting that this is likely to support the expansion activities of the construction and engineering firms, which would push them to occupy more office spaces in Metro Manila.
Also, insurance companies and flexible workspace operators have been taking up office spaces in Makati, Fort Bonifacio and Ortigas Center.
“Even local flexible workspace operators have been aggressive in scouting for available space in new Grade A buildings across Metro Manila,” the firm noted.
Meanwhile, Colliers said that demand for residential units, especially for house and lots in provinces, will be driven by sustained remittances from overseas Filipino workers (OFW) in the next three years.
Citing data from the Bangko Sentral ng Pilipinas, OFW remittances have reached P281 billion in the first two months of 2019, up by 2.3% from the same period last year.
“The sustained growth in remittances along with decelerating inflation and the central bank’s decision to cut interest rates by 25 basis points, should result in a cheaper cost of borrowing money,” Colliers said.
The property consultant recommended that developers consider areas like Pampanga, Cavite, Laguna, Batangas, Bacolod, Iloilo, and Davao for residential expansion.
As for industrial space and warehouses, demand will be driven by the growth of the manufacturing sector over the next three years. The sector grew by an annual 6.8% over the past three years.
“The development of the first Sino-Philippine industrial park by Ayala Land north of Metro Manila shows growing interest from industrial locators and developers to expand outside of the Cavite-Laguna-Batangas corridor, the country’s primary industrial hub,” the firm noted.
“Filinvest Land Inc. also announced that it is likely to start the construction of its industrial park in New Clark City in Tarlac (about 120 km from Manila) in 2019. This should further raise industrial investments north of Manila,” it added. — Vincent Mariel P. Galang