MANILA – Demand for office spaces is expected to remain stable and resilient, with the business process outsourcing (BPO) sector leading the growth in the Philippines amid global uncertainty brought about by the coronavirus disease 2019 (Covid-19) pandemic, according to Jones Lang LaSalle (JLL).
“The information technology-business process management (IT-BPM) industry may continue to spearhead demand for office spaces and this potential new trend of setting up satellite offices would be a strategic fit for the industry considering the significant number of employees in the sector,” the global real estate services firm said in an Office Market Study of Metro Manila and Metro Cebu prepared for Filinvest Land, Inc. (FLI).
JLL’s findings are positive for FLI subsidiary Cyberzone Properties, Inc. (CPI), which continues to derive steady cash flow from its office leasing business due to the resilience of the BPO sector even amidst the Covid-19 global pandemic.
“Our office leasing business is heavily supported by the BPO sector. In ‘Recalibration of the Philippine IT-BPM Industry Growth Forecasts for 2020-2022,’ an Everest Group study prepared for the IT & Business Process Association Philippines, the industry is expected to grow by 5.5 percent per annum for the next two years, with a 5-percent growth of employment per year, despite the pandemic. The outlook should significantly show an increase in growth once the health crisis improves,” CPI president and chief executive officer Maricel Brion-Lirio said in a statement Sunday.
CPI filed a Registration Statement with the Securities and Exchange Commission (SEC) last March 25, 2021 and an application to change its name to Filinvest REIT Corp. (FILRT), which are subject to regulatory approval.
FILRT manages the 18.7-hectare Northgate Cyberzone property in Filinvest City, Alabang -- one of the first Philippine Economic Zone Authority (PEZA) accredited IT Parks in the Philippines.
Seventeen buildings were selected to comprise the planned portfolio of the Filinvest REIT Corp.
Sixteen of the office buildings which were all rated Grade A (highest quality) by JLL are in Northgate Cyberzone, and one office tower with a retail component in Cebu Cyberzone, also a PEZA-registered economic zone is located in the gateway to Cebu IT Park, Lahug, Cebu City. These properties have a total gross leasable area (GLA) of 301,362 square meters.
“These 17 buildings were handpicked for the initial portfolio of FILRT due to the quality and diversity of its tenant mix,” Lirio said.
Based on the registration statement, of the occupied gross leasable area, 88.4 percent is occupied by prime multinational BPO companies with 8.8 percent occupied by traditional and retail tenants while Philippine offshore gaming operators (POGO) tenants account for under 2.8 percent as of March 31, 2021.
While the pandemic has dramatically altered the global business landscape and has reduced companies’ office space requirements due to the shift to work-from-home arrangements, JLL said this may not necessarily be the case in the Philippines where demand for office spaces is expected to grow.
“This global trial of remote work proved that work-from-home setup was generally feasible. However, in the Philippines, access to stable internet connection at home was one of the early hurdles that the businesses faced amid lockdowns. Also, internet connection in the country is not that affordable and not all families have the financial capacity to purchase such services. Also, one of the primary risks of a WFH setup is the risk of data security breaches since employees are relying on (an) unsecured network at home,” the JLL report cited.
In the so-called “next normal,” BPO firms are also likely to diversify and set up satellite offices, JLL said, forecasting increased leasing activity in Cebu City, Clark in North Luzon, and Bacolod City in Negros Occidental to support industry growth. (PR)