Glut in office spaces push rental rates down in Cebu

CEBU, Philippines - Although Cebu seems to be having an “over-supply” of Business Process Outsourcing (BPO) buildings and office spaces, this is seen to provide good advantage in attracting more investors.

 Cebu Investments and Promotions Center (CIPC) managing director Joel Mari S. Yu said because of the over-supply of for-rent or for-lease BPO office spaces, the rental rate in Cebu went down from by P100 per square-meter space, from as high as P650 in the previous years.

“We are having surplus of BPO office spaces in Cebu, and this is good. This inventory surplus brings down the rental rates and will further lure investors,” said Yu in an interview.

Because of this development, Yu said rental rates in Cebu is about 50 percent lower than that of prevailing rental rates in Metro Manila.

This year, at least five big names in the BPO and IT (Information Technology) are expected to open up offices in Cebu to employ at least eight-thousand people.

According to Yu, these are a combination of expansion and new entry of these IT and BPO giants in the world, and these are; JP Morgan and Chase, IBM, Dell, HP, Accenture and Floor Daniels.

Yu said JP Morgan, which now has over 600 employees, expressed interest to increase its manpower in Cebu to 2,000 by this year. Accenture on the other hand, recently inaugurated its second facility in Cebu at the Cybergate building in Fuente Osmeña, IBM which has an existing outsourcing here will also expand its manpower-based by next year.

Dell, HP and Floor Daniels are the new additional big names in Cebu’s BPO and IT sector, strengthening the province’s capability to host “five-star” BPO and IT investors.

He said the over-supply of office-space here will help these companies immediately start off their operations.

With the manpower issue, Yu said the pro-active stance of Cebu to improve the manpower capability initiated by the local government unit (LGU) and private stakeholders, such as the Cebu Educational Development for Information Technology (Cedfit) has given a relief to the manpower problem, as the academe sector is already working hand-in-hand with the players.

What is good in Cebu, Yu said is the pro-activeness of both government and the private sector to arrest the top concern of manpower supply in the BPO/IT sector here.

At present, the industry has a supply of about 32 thousand seats. This number is multiplied by three with the 24-hour operation. That makes it an average estimate of 96 thousand people working in the outsourcing in both voice and non-voice services. (FREEMAN)