BPO drives office space demand in provinces

Business process outsourcing (BPO) companies are driving demand in office spaces in key provincial areas, Leechiu Property Consultants Chief Executive Officer David Leechiu said.

In a briefing Tuesday, Leechiu said BPO firms are expected to go to the provinces in the near term as there is low vacancy in office spaces in Metro Manila.

Leechiu said current vacancy rate within the National Capital Region (NCR) is at 4.2 percent.

The BPO sector alone is expected to take up 750,000 to 800,000 square meters of office spaces this year.

The top seven IT-BPO firms are also aggressive in expanding outside Metro Manila.

To date, these seven largest IT-BPO companies have 47 sites outside NCR particularly in Bacolod, Baguio, Cebu, Pampanga, Davao, Iloilo, Laoag, Pampanga, Palawan, Rizal, Cagayan de Oro, Dumaguete, and Laguna.

From 2017 to 2023, 26 percent of office space supply will be outside Metro Manila.

The share of provinces to the total supply has increased from its current share of 15 percent.

Moreover, while the rental rates in Metro Manila is experiencing a seven-year boom, rental rates in provinces are very competitive ranging from PHP300 per sqm. in Nueva Ecija up to PHP700 per sqm. in Cebu.

Leechiu further noted that the drive of the Duterte administration to create more jobs in the countryside also pushes BPO companies to go outside Metro Manila and increase office space demand in the provinces.

The development of infrastructure in the provinces as well as the improved safety and security conditions outside NCR are also facilitating the flow of office demand in these areas.