Despite the city of Cebu being delisted from Tholons’ world rankings for cities as outsourcing destinations, the local BPO industry in Cebu is quietly thriving much like the previous years.
Colliers International recently reported in their Q2 2017 Office Report that 57% of the office leasing transactions was mostly from BPO, whereas the local office leasing market has grown at a 20% rate compared to last year’s rating. A total of 69,000 square meters of office space were leased in the first semester.
Dom Fredrick Andaya, Colliers International Philippines director for office spaces, noted the strong take up of BPO in Cebu’s local real estate market.
“The strong takeup from both BPOs and offshore gaming companies in Cebu is a welcome development. Amid concerns of BPO slowdown, the Cebu market has remained resilient,” Mr Andaya was quoted by Sun Star.
Offshore gaming sites, who were previously forecasted as upcoming players for the office space occupancy market, has more than exceeded expectations, as offshore gaming companies are aggressively taking up office space as part of their operational expansion.
Offshore gaming sites accounted for 37% of the total transactions according to Colliers.
The entry of new BPO companies is also a key factor for the office space occupation movement as new accounts are opening and are in need of office spaces to house their operations.
According to Colliers, BPO companies such as Real Page, Ripe Concepts, Iploy, Channel Fix, and Weserv Systems and among others have taken up entry into the Cebu BPO scene.
For the next 12 months, Colliers international is expecting a 5% increase in the average rental price due to the relatively high demand and the challenge is mounts for office spaces, which are now facing a short supply. BPO hubs in key areas such as Cebu Business Park and Cebu IT Park are expanding.
In Cebu’s Mandaue City and Lapu-Lapu City, rental prices for offices are relatively lower compared to the main business districts and there are more available office spaces that are otherwise unoccupied due to factors such as travel and convenience of location.
Available office spaces account for 2% in the combined areas of Cebu Business Park and Cebu IT Park while the 10% is the standing rate in which state the percentage of the unoccupied number of office spaces in the other parts of Cebu according to Colliers international.
Collier international expects that a total of 500,000 square meters of office spaces will be added in Cebu’s office space market within the next three years to accommodate the demand. By 2020, a total of 1.4 million square meters of office space will comprise that of Cebu.
However, according to Mr Andaya, new office spaces will be largely concentrated in the Cebu Business Park and Cebu IT Park.
For the city of Mandaue and Lapu-Lapu, the improvement of public infrastructure will help bolster the office leasing scene in the areas according to Mr Andaya.
Potential BPO companies looking to gain entry in Cebu are urged by Mr Andaya to keep a close watch on the office spaces in the Cebu Business Park and Cebu IT Park while also keeping track of the developments in Lapu-Lapu city and Mandaue City.
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