Modernization crucial to boosting PH industrialization

Aside from the typical office, residential, and retail projects, property players should also con- sider developing industrial space and warehouses within their masterplanned communities. (HTTPS://ABOITIZINFRACAPITAL.COM)

The industrial sector is seen to benefit significantly from the Philippine government’s efforts to promote the country as a manufacturing hub in Asean.

The Purchasing Managers’ Index (PMI), a barometer of manufacturing growth, has been steadily rising. Increased manufacturing investments are expected to boost industrial space absorption, particularly in the Cavite-Laguna-Batangas (Calaba) corridor and Central Luzon. Electric vehicle, semiconductor, and food and beverage manufacturers, as well as distribution centers, will further drive demand in these primary industrial hubs. Land leasehold and warehouse lease rates are likely to grow at flattish rates over the next 12 months.

Colliers Philippines encourages industrial players to incorporate technological innovation in their warehouses, address the growing demand for cold storage assets, work with the government and other stakeholders to upskill manufacturing workforce, and explore launching new industrial space and warehouses in emerging hubs.

Colliers Philippines believes that further modernization and diversification of the country’s manufacturing sector will greatly benefit property developers with massive industrial footprint.

Corner demand from cold storage sector

Colliers projects the cold chain sector sustaining demand for industrial and warehouse assets. We see this subsegment thriving even postpandemic. The Cold Chain Association of the Philippines (CCAP) said it expects the country’s cold storage capacity to grow by 8 percent to 10 percent annually until 2025. By 2024, the capacity will likely reach 750,000 metric tons from 600,000 MT in 2021.

Major property firms such as Ayala Land have also been aggressive in expanding their cold storage business. It recently opened ALogis Artico Santo Tomas in Light Industry & Science Park III in Batangas and will soon open an ALogis Artico in the upcoming Pampanga Technopark in Mabalacat. Meat product retailer First Atkins likewise acquired additional lots in Cavite Technopark for its expansion. The facility, inaugurated in March 2023, is one of the largest cold storage warehouses in the Philippines and the biggest in Southern Luzon.

Technological innovation

In our view, further adopting technological innovations is crucial for locators and landlords to offer better services and to corner strong pre-leasing for state-of-the-art facilities.

For instance, logistics company Maersk recently opened its Mega Distribution Center in Calamba, Laguna. This LEED Gold facility is considered as a state-of-the-art and the highest-spec warehouse in the country. It features solar panels, rainwater collection and smart lighting systems.

Develop industrial space within townships

Aside from the typical office, residential, and retail projects, property players should also consider developing industrial space and warehouses within their masterplanned communities.

Aboitiz InfraCapital recently launched the first phase of TARI Estate in Tarlac, its latest industrial park. Similar to its LIMA Estate in Batangas, the project will also house residential, office, retail and hotel components. Other townships that will incorporate industrial components include Ayala Land’s Vermosa in Cavite.

Continued engagement for workforce upskilling

Colliers believes that improving the skillset of manufacturing workers will likely be crucial in boosting the sector.

The Department of Trade and Industry (DTI) is looking at improving the manufacturing sector’s competitiveness through workforce upskilling as well as greater investment in digitalization, and the establishment of investment green lanes. The Advanced Manufacturing Workforce Development Alliance (AMDev) has also developed new training programs, which will improve the skillset of workers in the electronics and pharmaceutical industries.

What’s in store for the remainder of 2024

The industrial sector has managed to withstand pandemic-induced challenges. It remains as one of the more stable property segments today with demand for cold chain facilities and modern warehouses propelling the sector’s expansion.

With the industrial sector enjoying stable growth, developers should continue challenging the status quo and they can start by integrating technological innovation into their industrial parks and warehouses.

As Colliers previously highlighted, we see a strong pre-leasing for modern warehouses. We expect additional supply in Central and Southern Luzon that’s why industrial players should proactively coordinate with the government to ensure the steady supply of quality workforce for manufacturing facilities in these industrial hubs.

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