OUTSIDE of Metro Manila, Cebu has remained the top choice of outsourcing firms and multinational companies, capturing more than 50 percent of the total transactions recorded in 2023.
Of the 208,800 square meters of office transactions recorded outside of Metro Manila, Cebu accounted for 112,900 square meters of deals or 54 percent of total transactions, according to Colliers Philippines’ recent market report.
Outsourcing firms dominated, covering nearly 75 percent of total deals in Cebu. Among the notable transactions included spaces occupied by Concentrix, OfficePartners 360, Avant, TOA Global and Optum. These firms took up spaces at the Cebu IT Park (CITP).
In 2023, Colliers recorded the delivery of 60,200 square meters of new office space with the completion of Johndorf Tower at the Cebu Business Park (CBP), Faustina Center at the CBP Fringe and Skyrise 3B at the CITP.
This year, Colliers projects the delivery of 107,900 square meters of new office space. Among the buildings due to be completed in 2024 are Astra Corporate Center, Excelsior Corporate Tower, Filinvest Cebu Cyberzone Tower 3, Grand Tower Cebu Condo Office, Il Corso, Mahi, Patria de Cebu and Northwing Tower 1.
From 2024 to 2026, there will be an annual delivery of about 73,500 square meters of new office space at the CITP and at the reclamation area cornering a combined 58 percent of the new supply.
In terms of vacancy rates, Cebu experienced a slight improvement, dropping to 20.4 percent from the 21.7 percent recorded in 2022. This decrease can be attributed to the ongoing trend of demand outpacing new supply in the market.
However, in 2024, vacancy is expected to rise to 21.3 percent, given the delivery of 107,900 square meters of new office space.
Dom Fredrick Andaya, head of Tenant Representation/Office Services department for Colliers International Philippines, believes that shared services, healthcare companies and other multinational firms are likely to occupy these new office spaces.
In terms of space take-up, Cebu logged 65,800 square meters in 2023, down from 109,200 square meters in 2022.
In 2024, net absorption is expected to reach 72,000 square meters.
Andaya said they expect greater absorption of office space from third-party outsourcing and shared services firms looking to set up and expand their operations.
Flexible workspace
Moreover, in 2023, flexible workspace vacancy in Metro Cebu dropped to 20 percent, significantly lower than the 27 percent vacancy posted in 2022.
Flexible workspace operators such as BPO Seats, Avant Offices and Regus have capitalized on the demand for flexible workspaces by adding new sites to their portfolio. Profiles of notable flexible workspace occupiers include multinational companies, contact centers, accounting and financial services firms.
“With the market’s increased preference for non-traditional leases in Metro Cebu, Colliers encourages landlords to seize this opportunity by incorporating flexible workspaces in their leases. Landlords may also look into joint venture agreements with serviced office providers,” said Andaya. / KOC