BPOs drive Davao office market’s steady growth

By Maya M. Padillo, Correspondent

DAVAO CITY — The office market in Davao’s regional center is on a steady growth path thanks mainly to business process outsourcing (BPO) locators, according to real estate consultancy firm Prime Philippines.

“Davao City remains stable due to strong leases from BPO locators, amid select pre-terminations and business closures among smaller players,” Ruth Coyoca, head of Prime Philippines’ Visayas and Mindanao operations, said during a forum hosted by the Davao City business chamber on Friday.

In the first half of 2021, Ms. Coyoca said Prime Philippines had an additional 6,500 square meters (sq.m.) of office space supply, putting the current total at 185,000 sq.m.

The recent completion of Damosa Land, Inc.’s Diamond Tower will bring another 20,000 sq.m. in the portfolio, she added.

Ms. Coyoca said the city’s office market has continued to be attractive because of relatively low rates ranging from P250 to P1,000 per sq.m.

The retail space sector, however, has taken a hit as the pandemic continued. Ms. Coyoca said closing deals now are a challenge due to lockdowns and travel restrictions.

WAREHOUSES
Space for logistics operations also remained strong given Davao City’s position as a hub.

“The industrial sector is one of the resilient sectors that continued operating even during the start of the pandemic,” Ms. Coyoca said. The demand for warehouse space is spread across the different parts of the city, with the biggest coming from third party logistics and fast-moving consumer goods companies, she said.

The typical size requirement ranges from 500 to 1,000 sq.m., but the bigger clients occupy up to 16,000 sq.m.

Current warehouse rental rates range from P135 to P210 per sq.m.

“In terms of cost-efficiency, Davao is still more enticing for occupants,” she said.

Prime Philippines also saw in increased interest in raw land in Davao City during the first half of the year, mostly for residential use, with selling rates ranging from P190 to P8,000 per sq.m.

Ms. Coyoca cautioned, however, that land buyers must consider the city’s land use and urban masterplan before any acquisition.