Emerging demand drivers

By: - Reporter / @amyremoINQ
/ 04:29 AM October 06, 2018

New sectors are poised to become significant contributors to the bustling office property market in Cebu.


Apart from the business process outsourcing (BPO) and knowledge process outsourcing (KPO) sectors, other potential demand drivers include offshore gaming companies and language centers, according to Colliers International Philippines.

“Colliers believes that offshore gaming has the potential to become a major plank of the Cebu office market. With a more conducive local regulatory environment, we expect offshore gaming to become a major contributor to office space take up in Cebu,” Colliers said.


Offshore gaming companies had in fact accounted for 14 percent of office transactions in Cebu in the first half of the year.

Another potential major contributor to the office space demand in Cebu moving forward would be companies providing English as a secondary language (ESL) services, according to Colliers. As it is, there are already a number of ESL centers that are already operating in Cebu, including QQ English, TOMAS English Training Center, Access E-Talk Plus, Nexseed, and Winkey Online English Academy, it added.

“In our opinion, the expansion of these companies as well as the entry of new players bodes well for office space expansion moving forward. A mix of existing and new ESL providers is reportedly considering new office space due to be completed over the next 12 to 18 months in major business parks such as Cebu IT Park and Cebu Business Park,” Colliers said.

Robust take up

Despite initial concerns that office space demand from outsourcing firms in Metro Cebu will slow down this year, the said sector remained robust.

In the first half of the year, Colliers recorded about 58,000 sqm in office transactions, 74 percent of which can be attributed to BPOs and KPOs.

Among the large BPO and KPO companies that occupied space in Cebu in the first half include Shearwater Health, Cresco Shared Services, Convergys, Wipro and Teledirect. They primarily provide healthcare, information technology (IT) and customer support services.


Traditional and non-outsourcing firms meanwhile covered 12 percent of total transactions in the first half of 2018 with remittance centers, insurance companies, and educational services occupying space.

Cebu’s office stock is expected to reach 1.04 million sqm before the end of 2018.

Cebu office stock

According to Colliers, it expects Cebu’s office stock to reach 1.04 million sqm before the end of 2018. This is reportedly more than double Metro Cebu’s office stock in 2011.

As of end-2017, Cebu’s office stock reached 960,000 sqm in gross leasable area (GLA)—four times larger than Metro Cebu’s stock 10 years ago.

As of the second quarter, Metro Cebu’s office stock reached 1.01 million sqm following the completion of three new buildings, which delivered a combined 53,000 sqm of new leasable office space. The second half expects the delivery of nearly 30,000 sqm in Cebu.

Flexible office cuts

Meanwhile, Colliers is also encouraging developers to construct office space that could accommodate non-outsourcing and traditional businesses that require smaller space.

“Developers should be more flexible and keep in mind that the expansion of the Cebu economy drives the growth of traditional firms such as those involved in engineering and logistics that occupy smaller office space. This is particularly important for office towers that will be built around the uptown and downtown area which remains as the preferred location of traditional and non-BPO businesses,” Colliers explained.

“Developers should also consider government agencies in old office buildings that are likely to transfer to newer and larger offices in the near to medium term,” it further said.

Colliers likewise pointed to another potential office space demand driver: micro, small and medium enterprises (MSMEs) and start-ups, which may require co-working spaces.

“Colliers believes that flexible workspace operators can consider buying office spaces and converting them to co-working spaces; or partnering with developers to mitigate the impact of increasing rents. On the other hand, we encourage developers to dedicate co-working spaces in their buildings to take advantage of the sector’s growth,” added Maricris Sarino-Joson, Colliers Philippines associate director for office services.

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TAGS: Colliers International Philippines, office property, offshore gaming
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