MANILA, Philippines – The Bonifacio Global City (BGC) in Taguig is still the preferred location of business process outsourcing (BPO) firms in the country, property consultant Jones Lang LaSalle said on Wednesday.
More BPOs are setting up their offices in BGC because of infrastructure development and quality of office space in the area, according to Sheila Lobien, head of project leasing markets at Jones Lang.
She said among the 26 emerging business districts in Metro Manila, BGC saw the highest take-up rate in 2013.
Lobien said around 220,000 square meters of office space are taken in BGC, with about 60 percent coming from BPO companies. The rest came from traditional office operations.
“A lot of multinational companies are also consolidating in BGC, like Coca-Cola, Proctor and Gamble, Philam Life…big conglomerates but with a BPO component also,” she told ABS-CBNNews.com.
“They’re upgrading their offices because their rent in Makati is almost the same in Bonifacio, but in Bonifacio, you get a better, brand new office, maganda pa ‘yung environment,” she added.
Average office rental rates jumped by 29 percent in Makati, from P600-P800 per square meter per month in 2012 to P600-P1,200 in 2013.
In BGC, average rental rates went up by 15 percent from P600-P750 in 2012 to P700-P850 in 2013.
Lobien said aside from attractive rental rates, accessibility and high quality of development, BGC is the popular choice even for companies outside of the BPO industry because of lower taxes.
“We had a lot of clients who moved to Bonifacio this year because in terms of taxes, Bonifacio Global City is lower by 30 to 40 percent in average in the distributor and manufacturing industry. We had Acer and Electrolux move out of Makati to Bonifacio because of that simple reason,” she said.
She added that because of continuous development in BGC, rental rates are not expected to increase significantly in 2014.
“It’s always driven by supply and demand. There’s a healthy demand, but supply is also there catching up. So in terms of rental, yes, it is increasing but it’s a steady increase. The demand is equaling the supply, sometimes the demand is higher than the supply and when that happens of course rent will go up, but since there is so many land there to develop, and the supply is coming every quarter of every 6 months, it’s very healthy, it’s not going to be a 50 percent increase. It’ll be a 5-6 or a maximum of 10 percent,” she said.
Top office landlords in BGC
Jones Lang LaSalle associate director Henry Cabrera said the biggest transaction that happened in 2013 in terms of investment sales in BGC is the acquisition of SM Investments Corp. (SMIC) of 5 BPO buildings—the Net Plaza, Net Cube, Net Quad, Net Square and Net One.
The 5 BPO buildings have a combined 145,000 square meters of gross leasing area.
“We estimate this acquisition to be somewhere around P18 billion for the 5 buildings, which we believe will generate a yield of somewhere between 7 to 8 percent for the SM Group,” he said.
The acquisition made the SM Group the biggest office landlord in BGC with 21 percent of owned office space.
Ayala Land (8.9 percent) and W Group Inc. (7.6 percent) are second and third, respectively.
“We continue to see strong interest from other developers and investors to acquire property in Bonifacio, but the problem there is nobody is selling, and this has driven land values in Bonifacio to be the highest in Metro Manila with some lots selling as high as P480,000 per square meter,” said Cabrera.
Meanwhile, Jones Lang LaSalle associate director Lylah Fronda-Ledonio said Quezon City has also become a popular location for BPO firms.
“There is definitely a shift in take-up from the used to be strong Makati Central Business District now to Bonifacio Global City and Quezon City, mainly because there is really no new supply or new developments in Makati,” she said.
In Quezon City, 90 percent of the take-up came from BPO companies due to supply and talent availability.
Average office rental rates in Quezon City also jumped by 20 percent, from P400-P600 per square meter per month in 2012 to P550-P650 in 2013.