The information technology-business process outsourcing (BPO) sector has the potential to both accelerate and prevent the risk of office obsolescence in the Philippines, says property consulting firm Cushman & Wakefield.
A report recently released by the global real estate services firm shows that just 28 percent of office stock across Asia-Pacific currently meets the needs of top corporate occupiers—that is, office stock that is both A-Grade and holds sustainability accreditation.
Claro Cordero, director and head of research at Cushman & Wakefield, says IT-BPO companies are now increasingly looking for higher-quality buildings, with better facilities and amenities, to attract employees back to the office as they compete for talent with other industries that are more open to hybrid and work-from-home models.
“Over the past two decades, the focus of the market has been on these outsourcing companies, which typically do not require premium office buildings. These nonprime buildings, particularly those that are older and have run 24/7 operations, typically see a higher level of depreciation and so are likely to face obsolescence,” he says.
The need to reposition, retrofit or repurpose existing office stock will be greater for buildings that do not currently meet Grade A standards, or lack sustainability accreditation, Cordero notes.
“Office developers in the Philippines need to map out an effective asset lifecycle optimization plan to get ahead of the curve and maintain market relevance for future occupier demand and growth industries,” Cordero adds.