Why BPOs prefer to set up shop in Bonifacio Global City

by Cathy Rose A. Garcia, ABS-CBNnews.com

Posted at Jul 31 2013 06:10 PM | Updated as of Aug 01 2013 02:46 AM

MANILA, Philippines - The business process management industry is fueling growth in the office space market, according to property consultant Jones Lang LaSalle.

Sheila Lobien, head of project leasing - markets at Jones Lang LaSalle, noted BPO companies account for between 80-90% of supply take-up and pre-commitments for office space in Metro Manila.

"We have recorded more than 168,000 square meters of office space in the market... Right now pre-commitment is growing, which means the confidence is there. The BPO market is driving this demand," she said in a press briefing on Wednesday.

In the first six months of the year, total office space committed reached 168,000 square meters, of which 52,000 square meters were for BPO companies.

Bonifacio Global City is by far the most popular location for BPO companies. Lobien attributed BGC's popularity to its location as well as high quality of office developments.

"BGC is really the favorite. It's very near Makati and there's a lot of supply there, Grade A office space which are built to cater to the outsourcing market with high specifications, back-up power and the redundancy that BPOs would need," she said.

Another reason why BPOs prefer BGC is because rental rates are slighly lower than Makati. Jones Lang LaSalle data showed the office space rental in BGC ranges from P700-P900 per square meter a month, compared to P600-P1,200 per square meter a month in Makati.

There has been a steady increase in the average rent in central business districts, mainly due to supply pressure. The average rent went up 9% to P575-P750 per square meter a month in the first half of 2013 from P475-P650 a year ago.

Aside from Bonifacio Global City, BPO companies also prefer setting up offices in McKinley Hill and Quezon City. Lobien said Quezon City is attractive because of its labor pool.

More BPOs in provinces

Also, BPO companies are now increasingly setting up offices outside of Metro Manila. Jones Lang LaSalle national director - markets Lizanne Tan said 52,000 square meters of office space has been pre-committed in provincial locations such as Cebu, Davao, Antipolo, Cavite and Clark.

"Cebu and Makati are similar in rental rates to Metro Manila but everyone else is 30-40% less...This is part of the reason why a lot of companies are looking at provincial locations since it would bring down real estate costs. Apart from that they are tapping into a different labor pool which excites a lot of companies for their expansion," Tan said.

For instance, office rental rates in Cebu are between P400-P500 per square meter per month, while in Davao, the rates are P375-P450.