Supply of office space hits new record high

MANILA, Philippines - Supply of new office space in Metro Manila is expected to hit a new record-high this year amid strong demand from the business process outsourcing (BPO) sector, property consultancy firm Colliers International Philippines said.

“We expect more than 400,000 square meters (sqm) of new office supply per year starting this year until 2016. It will be reaching all-time highs,” Colliers International Philippines director Julius Guevara said in a briefing yesterday.

For this year, he said new office space supply in Metro Manila is expected to hit a record-high of 481,068 sqm.

The highest office stock in Metro Manila was last seen in 2009, when supply reached 476,000 sqm.

Guevara said new office space supply is seen to reach 449,481 sqm next year and rise to 486,726 sqm in 2016.

He said the unprecedented level of new supply is driven primarily by the strong demand coming from the BPO industry.

“Most of the supply is absorbed by BPOs. 85 to 90 percent of the supply is taken by them,” he said.

Also seen driving demand for office space are multinational firms expanding their operations in the country.

Despite the high level of new office stock expected, absorption is not seen to decline.

 “Absorption will not slow down. We still have highly educated workforce and low rates compared to other capital cities,” Guevara said.

He also said the upcoming Association of Southeast Asian Nations (ASEAN) integration may create more office demand here.

The ASEAN Economic Community, to be established by the end of next year, aims to create a single market and production base to promote free movement of goods, services, investment and skilled labor within the region.

While most of the new office supply expected are located in Metro Manila, Colliers International Philippines research analyst Romeo Arahan said that Cebu is seen to be the next preferred location for offices in the country.

“Iloilo, Davao and Clark are the next cities because there are offices there and manpower supply is there too,” he added.