BPO firms drive demand for Iloilo office space
WHILE the Metro Manila office market is seeing a slowdown in investments from business process outsourcing (BPO) firms, the market remained robust in Iloilo, where outsourcing firms continue to drive demand for office spaces.
This is according to the second quarter provincial property report by real estate consulting firm Colliers International, where it noted Iloilo has the foundations in place to cater to BPO expansion outside of Metro Manila.
“The government thrust to promote the province as a major investment hub in the Visayas, coupled with the planned projects of the country’s major developers provides a positive outlook for Iloilo. Companies such as iQor, WNS, Nearsol, and Yazaki Philippines EDS Technoserve took up spaces last year and started operations this year,” Colliers said in the report.
Colliers cited the visit of various businessmen from Hainan and Hong Kong to the province last April and May, where they scouted for potential locations to invest in property development or the BPO industry.
Iloilo also currently holds the eighth spot in terms of Highly Urbanized Cities, according to the National Competitiveness Council’s Cities and Municipalities Competitiveness Index. The same body ranked the province as second for government efficiency.
“Thus, the provincial city has remained in the radar of foreign BPO investors. The number of educational institutions has also made Iloilo a center for learning in the Visayas region and consequently a viable area for companies to locate in,” Colliers said.
Iloilo’s office stock currently stands at 72,800 square meters (sq.m.), coming from both local developers and major developers in the country. Present in the province since 2007 are property giants Megaworld Corp., Ayala Land, Inc. (ALI), SM Prime Holdings, Inc. (SM Prime), and Robinsons Land.
In 2018, around 46,100 sq.m. of office supply are expected to come online, which will come from Megaworld, ALI, and SM Prime.
Majority of tenants are BPO firms, according to Colliers. NonBPO tenants on the other hand comprise of government entities which have set up shop in malls. This includes satellite offices of the Land Transportation Authority, Department of Foreign Affairs, and Lingkod Pinoy Center, among others.
Rental rates are also among the reasons for the province’s ability to attract investors. By the end of the second quarter of 2017, rates were pegged between P250 to P550 per sq.m., which Colliers noted is flat from 2016 figures.
“This price is quite attractive for BPO tenants, especially for those looking for alternatives to Metro Manila and Metro Cebu,” Colliers said.
With this, vacancy rates in the province slipped to 8% in the second quarter of 2017, down from the 9% recorded a year ago.
“Buildings completed since 2016 are noticeable almost fully leased. This proves that demand is also driven by the available supply in the market,” Colliers said.