CEBU needs more large-scale, modern warehouse developments to attract manufacturing and regional distribution investments as industrial and logistics leasing continues to outpace office demand in the Philippines, according to property consultancy CBRE Philippines.
“Most of the available spaces in Cebu are geared toward city-serving distribution. What’s lacking are the mega-site spaces that are usually required for manufacturing and regional distribution centers,” AJ Sumalinog, head of research at CBRE Philippines, said during the firm’s second-quarter market briefing.
Warehouse facilities in Cebu are currently concentrated in Mactan, Mandaue, Consolacion, Cebu City and Lapu-Lapu City, serving mostly local distribution requirements.
Sumalinog said the shortage of large logistics facilities could limit Cebu’s ability to capitalize on the growing demand from manufacturers and logistics operators looking to expand outside Metro Manila.
Nationally, industrial and logistics transactions reached about 130,000 square meters in the second quarter, rising 31 percent from a year earlier and more than 150 percent from the previous quarter, surpassing office demand of 111,000 square meters, which declined year on year.
The average industrial lease expanded to 8,100 square meters, nearly four times the previous quarter, driven by several transactions exceeding 10,000 square meters.
“The third-party logistics sector drove demand this quarter,” Sumalinog said, adding that the energy sector is also becoming a serious space taker as companies expand investments in solar power projects amid high electricity costs.
CBRE also noted that occupiers increasingly prefer newer warehouse facilities, with most leasing activity involving warehouses less than five years old.
For Cebu, Sumalinog said developing larger logistics parks could strengthen the province’s position as a manufacturing and distribution hub in the Visayas.
Pax Silica development
She also pointed to the proposed Pax Silica development in New Clark City as a potential game changer for the country’s industrial property market.
The planned 1,600-hectare technology hub is intended to host artificial intelligence facilities, semiconductor assembly and testing, data centers, aerospace logistics and renewable energy projects under a US-led technology alliance.
Sumalinog said around 50 companies have already expressed interest in the project, which could spur an industrial boom in Central Luzon while creating spillover demand for hotels, serviced apartments and office developments.
However, she noted that negotiations are still ongoing and that the project’s economic benefits may not materialize for another two years.
Challenges include high power costs, infrastructure and water constraints, limited engineering talent, regulatory hurdles and competition from regional investment destinations such as India, Singapore and South Korea. / KOC