Efficient space planning, low operating costs are top preferences of tenants

MANILA, Philippines - With the sustained annual demand for office space in Metro Manila forecasted to register at 400,000 sqm. by 2014 or sooner from an annual average demand of 360,000 sqm. in 2011, developers in this market have never been busier.

Apart from the established real estate developers, new players are expected to fill demand with office projects located in each of the 19 new business districts now emerging in the metropolis. Studies by real estate service firm Jones Lang LaSalle Leechiu indicate that the take-up rates of these new office projects are likely to vary widely with a selection pre-leased by top corporations even before the building is completed, and others left with unproductive space months or years after the building is ready for occupancy.

Lizanne Tan, national director for markets for JLLL, explains that prospective corporate occupiers are focused on getting the best value on their leases. She says, “The efficiency ratio of an office space, or a high percentage of usable space is very important to an occupier. The higher the space efficiency, the better it is for the occupier whose rent is based on gross floor area.” She adds that low operating costs are likewise a priority.

Between 2012 and 2015, approximately one million sqm. of office space is expected to be constructed in Metro Manila or a record 55 percent more than the current office stock of 1.8 million sqm. Still, demand may overtake supply in three years unless more projects are launched within the next year. For potential lessors to take advantage of the strong demand situation, achieve the best lease rates and attract top multinational tenants, JLLL experts advise developers to design a building that meets or exceeds market expectations in terms of layout, physical attributes, and operating costs.

Kiko Abarquez, head of Project and Development Services, provides advice to JLLL clients on their building plans while still on the drawing board, and evaluates the building design from the point of view of potential lessees. He notes, for instance, that occupiers like BPOs and call centers have very specific concerns. To these occupiers, design is critical to PEZA accreditation and should meet the requirements of high-density operations. “We point out details on the location of doors, staircases, means of egress, among many other features in the building design process as a value-added service so that plans can be rectified before construction commences.”

Berna Santiago, JLLL Head of Integrated Facilities, Property and Asset Management, relates that property management experts in her firm are also asked to review a building’s blueprints and assess them from the point of view of operating costs. A building with large common areas like elevator lobbies will charge proportionately higher CUSA (common usage service area) fees which will be borne ultimately by the tenants. “A building owner aiming for early commitments on his space should ensure that his CUSA is competitive in the market.”

Santiago adds that air-conditioning contributes to the bulk of energy costs, hence tenants now require energy-efficient cooling systems like VRF (variable refrigerant flow). These newer air-conditioning systems allow air-conditioning to be shut off in unoccupied areas. She adds that many buildings built in Metro Manila in the 1990s and earlier are unable to minimize their energy consumption because of antiquated air-conditioning systems that are expensive to operate.

Santiago further points out, “The best design teams also include property and project managers – to complement the architects.” She recalls having consulted on a building designed to have eight entrances from the street. “If you realize that each entrance will require security services for at least 12 hours a day at a rate of P34,000 per security guard per month, you would think twice about having so many entrances.”

Building owners making significant investments in real estate need solid advice built from long years of experience in the business. Having managed a wide assortment of buildings over three decades, Santiago further cited buildings that locate heavy operating equipment like generators several stories above ground. “Much of this equipment cannot fit into the service elevators,” she says.