Demand for high-end office space seen growing in 2017
By Catherine Pillas, published in BusinessMirror.
Demand for premium office space is seen expanding this year, given the growing competitiveness of the Philippines as a destination for players in the business-process outsourcing (BPO) industry, multinational firms and tech companies.
Jones Lang LaSalle (JLL) Chairman Lindsay J. Orr said the local real-estate market will be challenged to meet the demand in the luxury segment, both in the residential and office-space sector.
Demand for premium residential units is mostly driven by the rising incomes of the higher-middle class, who can now afford residences priced at P15 million and above.
In the residential sector, luxury-living spaces only account for some 5 percent of all developments, but this is seen expanding in the next five years.
For office spaces, an interesting expansion trend among multinational companies and tech companies will fuel growth in the premium market—a big win for high-end office developers like the Net Group.
The Net Group, the upscale office developer with the largest footprint in Bonifacio Global City, recently welcomed Google Philippines as its latest tenant in its Net Park Building.
Other multinationals and large firms that have consolidated local offices and located to one of Net Group's seven office buildings are Coca-Cola, Procter and Gamble, and Philam Life.
"Corporate offices have grown: NetPark is where Google Philippines headquarters are now, and it's great to see even these tech companies, even Lazada, which is a big e-commerce player, as our tenants. This is an interesting trend seeing these tech companies as new tenants in the market that are willing to pay more for quality space," said Raymond Rufino, executive vice president of the Net Group, at the press conference for the fifth Annual Property Guru Philippines Property Awards.
Future growth for premium office space will also be driven by a specific segment of the BPO sector—the captive Knowledge Process Outsourcing firms.
"The typical BPO, like service providers, are looking for efficient and cost-effective space, but the captives are looking for quality and are prepared to pay more for the right office," Orr said.
Should there be a mushrooming of these premium office spaces, Bonifacio Global City is the place to be, but only because Makati Central Business District (CBD) has so little space left, he added.
"In the BPO sphere, most of the available space is in BGC. Even as Makati is still the No. 1 CBD for traditional office users, the premium buildings there have higher rental rates than in BGC. The highest in BGC is around P1,200 per square meter, but in Makati, because of the space, [developers can ask] around P1,400 per square meter," Orr said.
The JLL Chairman will serve as the chairman of the judging panel during the Philippines Property Awards (PPA) 2017.
The PPA 2017 is the search for the best local property developers and developments in the established and emerging property markets of Mega Manila, Metro Cebu and Metro Davao.
A short list of nominees with commendations will be revealed in April. The PPA 2017 will be held on May 4.