Robust BPO sector to drive up office space demand

The robust growth of the business process outsourcing (BPO) industry would sustain the demand for office space in Manila this year, according to global property consultancy firm Cushman & Wakefield.

In its research publication titled “Asia-Pacific Office Forecast 2015-2016” released in December, Cushman & Wakefield noted that the Philippine economy was “expected to continue on its growth track and remain as a bright spot in the Asean region in the short to medium term” on the back of a resurgence in manufacturing, expected accelerated government spending on public-private partnership (PPP) projects, as well as strong growth of the BPO sector.

Amid rosy economic prospects, “[p]rime and grade A office leasing demand continued to be positive in 2014 as new and existing O&O [outsourcing and offshoring] firms continue to enter and expand their footprint across various offices within Metro Manila,” Cushman & Wakefield noted.

The Philippine BPO industry was expected to end 2014 with $18 billion in revenues, on top of having reached a milestone of employing one million people as of mid-2014.

“The strength of the O&O industry makes the office market an attractive investment choice for both local and foreign investors. Capital values have posted steady growth in Manila’s core business districts, vacancy rates remain low and the continued expansion of reputable multinational companies make the office sector an attractive option,” said Cushman & Wakefield Philippines general manager Joe Curran.

Cushman & Wakefield said that while the BPO sector would continue to be the “primary growth driver” of the office market in Metro Manila, “we still see growing office demand from traditional corporate occupiers seeking to either relocate or consolidate office space in select key districts.”

“This projected sustained office demand should be able to offset supply pressure from the large volume of future stock in the next two years, keeping vacancy levels relatively low and driving moderate rental growth,” Cushman & Wakefield said.