THE OFFICE market in South Luzon is attracting business process outsourcing (BPO) firms due to the availability of local talent, infrastructure, and the advantage of being located outside the capital’s traditional business districts, according to Colliers Philippines.
“There are BPOs that are actively and consciously veering away from traditional business districts in Manila and have made it a point, as part of their core site selection strategy, to not be in Manila. Instead, they are locating in the fringes of Manila where the people actually live,” Colliers Associate Director for Office Services Kevin R. Jara said during a briefing on Aug. 27.
Among the BPO companies that occupy office space outside the traditional central business districts are iQor, Concentrix, Appen, Teleperformance, and TaskUs, according to Colliers Philippines.
Mr. Jara said talent availability and infrastructure remain top considerations for locators. Cavite, Laguna, and Batangas (CALABA) have a combined population of 10 million people, with 4.8 million in the working-age group.
Office buildings integrated with retail are becoming popular among BPO companies seeking office space in South Luzon, he said.
He also noted that such buildings typically achieve higher occupancy rates compared to standard office buildings. Examples include Megaworld Corp.’s Southwoods BPO Tower 1 and 2, SM Holdings Inc.’s The Core Towers 1-3, and Ayala Land, Inc.’s One & Two Evoctech.
“The average occupancy rate of office buildings here in Southern Luzon that are attached to retail or commercial developments is typically about 80%,” Mr. Jara said, “compared to below 50% for standalone buildings.”
“The office market here in CALABA is just a small market, and we just recorded 5,000 square meters (sq.m.) over the past six months for this particular area,” he also said.
South Luzon also benefits from infrastructure projects like the Light Rail Train 1 Cavite extension, Skyway 3, and the South Luzon Expressway, which could further increase land and property values in the region, Colliers Philippines said.
Mr. Jara also noted that office space transactions in the Philippines are still concentrated in Manila, which accounted for 79% of transactions in the first six months of 2024, while provincial areas accounted for 21%.
Colliers Philippines reported a total of 122,000 sq.m. in office space transactions for the first half of 2024, up from 88,000 sq. m. in the same period last year. This increase was driven by activity in Cebu, Pampanga, and Iloilo.
Joey Roi Bondoc, director and head of research at Colliers Philippines, noted that the Cavite-Laguna-Batangas-Rizal-Quezon (Calabarzon) region accounted for 15% of deployed migrant workers in 2022. Given this, it is “not surprising” that developers are “aggressively” land banking and launching projects in the region, where many recipients of cash remittances are located, he added.
He also noted that the time required to fully absorb condominium units in Metro Manila has increased, meaning it now takes longer to sell these units. However, demand for horizontal developments remains consistently strong.
“This means there’s a strong appetite for the horizontal segment, especially for the Southern Luzon region where you have OFWs and local investors that are still investing in this household lot and lot-only developments,” he added.
In addition, due to the “strong demand” for horizontal units in the CALABA corridor, the average price of a house and lot unit is P4.7 million, which has been increasing by approximately 7.2% annually from 2016 to 2020, Colliers Philippines said.
“In the lot-only segment, we are also observing strong demand for horizontal properties. The average price per square meter is approximately P19,000, which results in an annual growth rate of about 6.7%,” Mr. Bondoc said. — Aubrey Rose A. Inosante
