24/7 BPO operations spawn growth across related sectors

“The city that never sleeps” is no longer an adage monopolized by New York City, as numerous metropolitan centers have sprouted in countries such as the Philippines that have attuned themselves to a round-the-clock business, commercial and social lifestyle.

Manila, about 14,000 kilometers east of North America, is one of the emergent cities with a booming call center or business process outsourcing (BPO) industry, which has spawned attendant changes in the way people live, work and recreate, according to leading real estate consultancy CBRE Philippines.

The local BPO industry has been identified as one of the main drivers of the Philippine property market in recent years.

The office market is dominated by BPO demand, composing as much as 80 percent of yearly take-up.

According to data from CBRE Philippines’ Metro Manila Marketview report for the second quarter of 2013, brisk expansions among global firms during the period caused overall office vacancy rate in Metro Manila to drop to 2.51 percent from the previous quarter’s 3.21 percent, amid supply pressures.

Take up from multinational and BPO companies was likewise observed from new tenants in Prime and Grade A offices during the second quarter.

“Outlook for the office market remains optimistic for the rest of the year, and increasing office space demand from multinational and BPO companies shall sustain the office market,” says Rick Santos, chair and founder of CBRE Philippines.

The BPO boom has led to the popularization of the term “night shift,” which was previously associated mainly with security or law enforcement jobs.

“Philippine society, particularly the young professionals, has indeed experienced a radical lifestyle change,” explains Santos.

The retail sector is one of the main benefactors of this change, as stores that used to operate only until late at night now operate a full 24 hours a day, and even on local holidays.

Commercial convenience stores and coffee shops that cater to customers round-the-clock have become staple tenants in commercial spaces of office buildings, with global chain 7-Eleven and Ministop among the top players in the market.

Family Mart, a Japanese convenience store chain brought into the Philippines by the Rustan’s Group and Itochu, is one of the new establishments with 24/7 services catering to BPO employees, as well as a market segment of middle-class office workers.

The consumer lifestyle shift and increased income of the labor force in business centers, especially those in the BPO sector, sustained the expansion of convenience stores near offices while concurrently strengthening ground floor retail trend. Low vacancy rating was sustained in the second quarter this year at around the 5 percent level.

This year, the expected completion of approximately 432,000 square meters of additional gross leasable area will ease supply pressure.

Retail market businesses will remain profitable for the remainder of the year due to a strengthening Philippine economy driven by the growing BPO industry, remittances from Overseas Filipino Workers, and strengthening middle market that can sustain the operations of retail establishments, according to Santos.

Shifting work schedules have also proved to be a benefit to the residential property market near business centers. “Employees under such schedules find it more safe and convenient to rent or purchase condominiums or apartments near their workplace,” says Santos.

“It is clear that this lifestyle change brought by the growth of the BPO sector is enlivening the economy and the property market in more ways than one,” he says.