OFFICE supply in Cebu will continue to rise in the next three years as it builds more office towers around the metro.
Property analyst David Leechiu said supply will grow 46 percent from 2020 to 2023, with a total of 603,000 square meters (sq.m.) of new supply expected to boost the city’s burgeoning office sector.
The Cebu IT Park, home to the city’s young workforce and call center companies, will account about 43 percent of the total pipeline supply.
In the last 27 years since the 1990s when the Cebu’s economy started to boom, it has already built around 1.31 million sq.m. of office space, with the outsourcing sector driving much of the demand.
According to Leechiu, information technology-business process management (IT-BPM) companies are expected to continue leading Cebu’s office demand through the end of 2020, noting the industry’s shift into the non-voice sector.
In 2019, the IT-BPM industry accounted for about 50 percent of the total office demand in Cebu, followed by flexible workspaces and offshore gaming operators at 18 percent and 11 percent, respectively.
Joey Bondoc, senior research manager at Colliers International Philippines, projected outsourcing and offshore gaming companies will drive office demand moving forward.
A potential demand from English as a Second Language (ESL) companies is also seen to sustain the annual office take-up of about 140,600 sq.m. through 2021.
Colliers expects the delivery of about 279,000 sq.m. of new supply from 2020 to 2021, more than half is likely to be in the city’s main business districts.
The real estate consultancy firm sees a four percent annual increase in rates over the next two years, with Cebu IT Park and Cebu Business Park recording the fastest rise in rents.
Cebu has continued to attract office locators aside from outsourcing firms.
“Aside from outsourcing firms, several traditional and non-outsourcing companies continue to open shop in Cebu City and Mandaue, requiring smaller office cuts. Colliers believes that developers should be more flexible and mindful of the expansion of non-outsourcing businesses such as banks, insurance firms, manpower agencies and law firms,” Bondoc said.
Mandaue, in particular, is projected to see a greater absorption of office space as the city stands to capture a fraction of offshore gaming operations from Mactan.
Despite falling in the ranking among global outsourcing destinations, Cebu remains a preferred investment site outside Manila.
In Tholons’ 2019 survey of the most attractive outsourcing sites in the world, Cebu ranked 12th from 11th in 2018.
Cebu’s outsourcing growth is seen to be sustained by a steady pool of competent college graduates capable of handling voice support and higher-value outsourcing services such as medical and legal transcription and software engineering.
Colliers projected that companies planning to locate outside Manila should include Cebu among their options.