BPO space supply seen lower than target

MANILA, Philippines – While the business process outsourcing sector continues to expect growth amid the economic downturn, the roll out of newly constructed office space is expected to be limited to only half of the originally planned supply this year.

According to Claro Cordero Jr., head of research and valuation for Jones Lang Lasalle Leechiu, the earlier projection of an additional 200,000 square meters (sq.m.) of office space for 2009 had been trimmed by half to only 100,000 sq.m.

“The real estate side of the BPO sector is still quite good, although the number of office developments to be completed this year has been scaled down,” he said in an interview. “There was still no crisis when we first made our projections.”

Most of the demand would still be for office space in prime locations such as Makati and Ortigas, he said, but since these locations were now already saturated, demand for space in second-tier locations was also expected to increase.

“Companies are now going to decentralized areas and nearby provinces such as Cavite. They’re also looking at Baguio, Cebu and Davao,” he said.

As for the trend in types of office spaces being offered, he said most developers were focused on build-to-suit spaces that were flexible enough to cater to the various size requirements of different companies.

Right now, lease rates were still highest in prime locations in Makati at P650-P750 per square meter, he said. Other locations in Makati as well as at the nearby Bonifacio Global City offered slightly lower rates at P600-P700.

Outside Makati and the Global City, particularly in the Ortigas area, he said potential BPO tenants could expect to pay P500-P600 per square meter a month. Other areas usually offered lease rates of P400-P500 per square meter.

The Commission on Information and Communications Technology, Business Processing Association of the Philippines and the Department of Trade and Industry are promoting areas outside Metro Manila and Metro Cebu as potential sites for BPO operations.

The 10 best sites outside Metro Manila and Metro Cebu, dubbed the Top 10 Next Wave Cities, are Metro Laguna, Metro Cavite, Iloilo City, Davao City, Bacolod City, Metro Pampanga, East and West Bulacan, Cagayan de Oro City and Lipa City. –Abigail L. Ho, Philippine Daily Inquirer