DEMAND for office spaces will continue to thrive amid the pandemic and Metro Cebu will remain an attractive outsourcing site due to its quality workforce, improving infrastructure and lower cost of living compared to Metro Manila, a property research firm said.
Colliers Philippines said even with the negative impact caused by the Covid-19 pandemic on a lot of industries, companies will continue outsourcing some of their tasks.
“Moving forward, office leasing will be driven by companies based in the United States and other major economies that continue to expand and outsource activities from hubs such as the Philippines,” said Maricris Sarino-Joson, Colliers Philippines’ head of Landlord Representation.
“To sustain growth post-pandemic, companies in major economies are expected to continue outsourcing. We saw this after the global financial crisis. Firms are likely to continue outsourcing to sustain growth beyond 2021,” she added.
In its latest available market report, Colliers saw Metro Cebu recording positive net office absorption in the first quarter of this year, ending two consecutive quarters of negative net takeup.
“Demand was mainly driven by outsourcing and traditional occupiers. We see demand slowly recovering by the end of 2021, depending upon the pace of the vaccine rollout,” the property research firm said.
“Metro Cebu tenants and landlords believe that a successful rollout of the Covid-19 vaccine will play a pivotal role in the recovery of office leasing, our expectation is that a demand recovery will start between the fourth quarter of 2021 and first quarter of 2022,” it noted.
Colliers Philippines said it also expects a 10 percent correction in lease rates in 2021 before a slow recovery starting in 2022.
According to Colliers, Cebu remains a preferred business destination outside Metro Manila due to its competitiveness in terms of manpower, infrastructure and cost of doing business.
Recently, the Cebu-Cordova Link Expressway, the bridge linking Cebu City and Cordova, Mactan was connected. This longest and tallest bridge in the Philippines, spanning 8.9 kilometers is set to be opened in the first quarter of 2022.
“In our view, Metro Cebu will likely remain a viable destination for firms looking to open space outside of Metro Manila beyond this Covid-affected period, even for higher-value outsourcing services such as healthcare and technology firms,” the firm said.
According to Joson, while some business process management firms implement work-from-home arrangements, “we see these companies still occupying traditional office space. We see Cebu cornering some of the deals outside Metro Manila.”
“The pent-up demand post-Covid will likely gravitate towards these locations due to the wide availability of Philippine Economic Zone Authority-registered and fully fitted spaces. Outsourcing and traditional firms can take advantage of the discounts offered in the market in exchange for longer lease terms,” Colliers said. (KOC)