BPOs Still to Drive Office Space Demand in 2019

After seeing a few years of decline, the business process outsourcing (BPO) industry is expected to come back with a vengeance in 2019, so much so that it is expected to become a major driving force in office take-up next year, according to Leechiu Property Consultant (LPC).

LPC chief executive officer David Leechiu said many big brands from the United States (US) have committed to tens of thousands of jobs in the Philippines in the next 18 months.

“They gonna set up office (here). They are gonna hire people like crazy and be operational within the next nine to 18 months and these are big facilities,” he said in an interview on Monday.

Leechiu said the BPO take-up in Metro Manila has been continuously declining from 485,000 square meters (sqm) in 2016 to 289,819 sqm this year.

“They have diversified out of the Philippines in 2017 and 2018 and now that they have done that, they gonna going to come back here. The rapidly rising cost of labor in the US because of the record unemployment is going to drive, force companies to come back to the Philippines,” he said.

To facilitate the expansion of the BPO industry, Leechiu said the government needs to promote more Philippine Economic Zone Authority (PEZA) zones, boost investment in education and retooling of people, and compromise on tax incentives.

“Why let these opportunities pass,” he said, referring to the need to sustain the interest of these BPO players in the country, including Metro Manila.

Apart from the BPO sector, Leechiu said demand for office space next year will also come from Philippine offshore gaming operators (POGO) and multinational companies albeit slowly.

Meanwhile, LPC reported that demand for office space in the Philippines reached a record high of 1.5 million sqm. as of December 2018, with Metro Manila accounting for 74 percent.

Demand in the Metro Manila grew from 910,000 sqm. in 2017 to 1.16 million sqm. by December 2018, posting a growth of 27 percent. The figure included pre-commitments by BPO tenants competing for scarce PEZA-accredited spaces to be completed in 2019 in the capital.

Outside of Metro Manila, Clark Global City registered the highest office demand at 156,000 sqm.

Cebu and Laguna followed posting 133,000 sqm and 46,000 sqm., respectively. Davao City took fourth place generating 28,000 sqm. (PNA)