THE office-space market in the country is resilient to any downsizing the business-process outsourcing (BPO) industry may experience, as office demand from the professional-services industry and government is more than ready to pick up any slack in demand, real- estate service company Prime Philippines said.
Jet Yu, managing director of Prime Philippines, said even with BPO sector on the rise, should its growth taper off in the future, other industries are rapidly taking up the slack. “The question often thrown at us, especially the office landlords, is ‘What if the BPO market collapses? Who will replace the demand for these office spaces? Although the market is still on an upward trajectory, the good news is that the office-space market is not solely or highly dependent on the BPO industry. Should it slow down, there are companies that can still absorb these spaces,” Yu said during the “Asia Leaders Forum: Real Estate in the Philippines” on Friday.
A survey conducted by the firm in Quezon City showed the country’s largest office-space demand is by the BPO and the information, communication and technology sector, with a share of 31.17 percent.
This was followed closely by demand from general services firms, having a share of 23.8 percent.
With a share of 6.47 percent, the estimated requirement of the government is at 200,000 to 500,000 square meters, nearly comprising an entire building, Yu said.
“Let’s not forget our government agencies are also expanding very fast. The government just launched the Department of Information and Communication Technology [DICT]. It’s really growing fast, and we should consider this,” the executive said.
Even with this assurance, the office-space market is building capacity for expansion and establishment of the BPO sector.
In the country, there’s an estimated 6.3 million sq m of office space taken up by BPOs in buildings and IT parks registered with the Philippine Economic Zone Authority, with 79 percent located in the National Capital Region.
This healthy mix of demand from different sectors will prove useful for office-space landlords to distribute their tenancy in their building.
“A good tenant mix in a building can lessen the risk of the sudden drop of rental income in the case of a recession or an economic meltdown; It’s not a guarantee, but it can lessen the risk of leaving you with a high vacancy rate,” he said.
Prime Philippines is a real-estate service firm based in Quezon City, and will soon open an office in Davao City by year-end. Its starting client base in 2014 of 500 clients has grown to 2,700, with revenues seeing a triple-digit growth in its first year.