Joey Radovan, director of corporate services at CB Richard Ellis Phils., said the average vacancy level for premium/Grade A Makati office space has dipped to 5.4 percent from 9.8 percent while average rental rates rose 7.8 percent as more companies are renting office spaces as part of their expansion or business plan.
Radovan said office rental rates increased to P550 per square meter from P510 per square meter.
The robust demand for office space, he said, was driven by the relocation of multinational companies and embassies from Grade B and C buildings and the continued demand from new and expanding business process outsourcing (BPO) firms and information technology (IT) companies.
The call center business is the fastest-growing segment of the BPO industry and a major source of job growth in the Philippines. Government data indicate that from just 3,500 seats in 2001, the business has grown to 20,000 seats in 2003 and was estimated to have reached 40,000 last year. The government is targeting 60,000 seats this year. Each call-center seat is equivalent to around two jobs.
"Given the low vacancy rates and the lack of both contiguous office space in prime/Grade A buildings and available land on which to build upon, call centers/BPOs with large office space requirements are increasingly being forced to move to alternative CBDs and fringe areas of the city where they are building their own build-to-suit buildings or are converting shopping malls and other types of retail establishments into suitable space," Radovan said.
With improved office market conditions, developers such as Ayala Land, Filinvest Land, and Megaworld have become optimistic enough to break ground on new projects, he said.
Radovan said call centers and other IT-enabled service related companies will continue to drive the Metro Manila office market and overall demand is not expected to plateau in the near future.
Some experts even forecast 100-percent growth in call center seats over the next two to three years.
This translates into strong demand for more premium/Grade A office space, increased hotel and serviced apartment occupancy and a larger middle class who will need more suitable housing, retail, entertainment and tourism options.
CB Richard Ellis Phils. president and managing director Rick Santos said the property boom is not only limited to the business districts of Makati and Ortigas areas but also include the provinces of Cebu, Davao, Baguio City, Cagayan and Zamboanga.
Santos said the property boom is also being helped by the influx of more foreign tourists looking for alternative destinations after killer tsunamis hit Thailand. He noted that the bulk of these tourists are Chinese, Japanese and Koreans.