NextGen Day

According to property services company KMC Savills, more business process outsourcing (BPO) organizations prefer to open their next offices in the provinces rather than in Metro Manila.

Frederick Rara, senior manager of KMC Savills research and consultancy, stated in a briefing in Taguig City on Wednesday that there has been a drastic shift in the location of BPO companies outside the National Capital Region (NCR), as evidenced by the decline in the vacancy rate in office buildings in Cebu, Clark, and Iloilo.

The vacancy rate of Iloilo alone is only 5%, which is significantly lower than Metro Manila’s vacancy rate of about 20%.

On our end, Metro Manila is pretty bearish. We have a strong bullish outlook for the regional markets, Rara remarked.

Even with the recovery of net absorption in Metro Manila office spaces, he continued, KMC Savills does not anticipate the occupancy rate rising beyond 85% until 2025.

According to KMC Savills’ fourth quarter of 2022 research, “The top submarkets may likely prevent a prolonged office glut, but Makati CBD (central business district) and Ortigas Center are still at risk if office demand from the BPO sector loses pace in favor of provincial markets.”

Rara claimed that while office rents in Metro Manila are declining to maintain occupancy, rental rates in the provinces are rising to between PHP500 and PHP600 per square meter (sqm), approaching those of Ortigas and Alabang.

In the last ten years, he claimed, prices in the provinces have more than doubled.

54 percent of the industry’s growth is expected to come from outside of the National Capital Region, according to the Information Technology and Business Process Association of the Philippines (IBPAP).

By 2028, the ITBPO industry hopes to generate USD59 billion in revenue and employ 2.5 million Filipinos.

In this decade, the business, according to Rara, will surpass remittances from Filipinos living abroad and continue to drive both the country’s housing market and overall economic growth.

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