This month’s the last month of the year. As we look back, 2012 has been a great year for the real estate industry and the Philippine economy. Most experts foresees that this year’s growth will continue in 2013.
Office spaces have been growing, especially due to the expansion of Business Process Outsourcing (BPO) sector.
Currently, Makati and Bonifacio Global City remains the best Central Business Districts in the country. According to the data of Mr. Lee Chiu of Jones Lang La Salle, Makati has the most number of office spaces being used at the rate of 2.90 compared to Bonifacio Global City (BGC) at 0.48. But, based on the record, eventhough BGC has few office spaces, it is growing faster than Makati as more and more offices are relocating their business from Makati to Global City.
While prices and occupancy rates have remained high at the aggregate level, individual buildings, particularly Grade A and Grade B buildings are being affected by a steady migration of corporate headquarters from the traditional Makati Central Business District to the Fort Bonifacio Central Business District. The change has been gaining momentum since 2004 when it was noticed that more new companies were setting up offices in the Fort CBD compared to Makati CBD. The Fort CBD is better-planned, greener and more spacious compared to the older, Makati CBD. It is also the first CBD in the Philippines to strictly follow a zoning regime which maximizes property values for all properties in the CBD.
Consequently, venerable and even relatively new, Grade A buildings in the Makati CBD have not been recovering lease rates as fast as in previous downturns and the typical lease term has gone down from 5 years to 3 years or less. Ayala Corporation, the primary developer of both Makati and Fort CBDs, plans to eventually convert Makati CBD into a residential and commercial enclave while the Fort CBD becomes the location for A1 corporate addresses. The previous medium-term plan called for such a transformation by 2015 at the earliest, and 2020 at the latest. At the current rate of business migration, the former scenario is the most likely. Makati CBD office leases may eventually be lowered to perhaps 10% less of current levels given prevailing demand and supply factors by 2015.
In JLLS Office Supply Take-up Transactions during the first semester of 2012, with a total disposition of 167,000 sqm, BGC still top the list of office take up during the first semester of 2012, accounting at 49%. Next is Bay City at 17%, Mandaluyong City at 12%, Eastwood at 8%, Ortigas Center and Alabang Center at 6%, and Makati and Araneta Center at 1%.
For the disposition of 165,000 sqm, Makati and Ortigas leads the pack with 32% and 26% respectively. They are followed by Alabang and Araneta Center at 9%, BGC at 8%, Bay City and Mandaluyong at 6%, and McKinley Hill at 4%.
For office supply, with a 2011 static demand at 360,000 sqm, a total remaining supply for this year stands at 65,000 and is expected to increase to 90,000 in 2013. For the Static Demand at 400,000 sqm, the remaining supply for this year is 25,000 and will double up next year at 50,000.
As a proof that the office and real estate sector are in a boom, JLLS reported higher leasing activity in Manila. Mr. Leechiu said that with several more leases expected to close before the year ends, leasing activity has exceeded JLLS forecast.
“We are seeing confident investment sentiment not just in office development but also in the acquisition of property for future development, whether it be for mixed use, commercial, residential, hospitality, retail or industrial,” Mr. Leechiu said.
Meanwhile, Manila has grown as a real estate investment and destination this year by the Urban Land Institute and PWC. The nation’s capital ranked 12th out of 22 cities in the list of top investment cities in the Emerging Trends in Real Estate 2013 report.
According to the ULI report, “Markets in Manila have performed well in the past couple of years as a result of the growing economy, a transparent and business-friendly government, and the country’s ongoing success—an ‘eye-opener’—in attracting foreign corporate clients to its business process outsourcing (BPO) facilities. Bureaucracy has declined and transparency has improved considerably over the past few years.”
Philippine Vice President, Jejomar Binay, gave credit to the booming BPO sector for the higher demand for commercial and office space.
Also the Chairman of Housing and Urban Development Coordinating Council (HUDCC), Binay expects the real estate industry to rise further with the forecast of speedy growth by the BPO sector, in which he described as a “property driver” because of the forecast of Business Processing Association of the Philippine (BPAP) “that by 2016, the IT-BPO industry will contribute $12.9 billion in annual salaries and benefits wherein housing will get 13 percent of this consumption.”
Aside from the growth, BPO and IT sectors are now beginning to heed the call for employment for persons with disabilities (PWD)- they are turning to PWDs to fill vacancies for IT jobs.
During the ICT Job Fair held last June, local and multinational companies offered different jobs to PWDs. Some of them planned to re-design their office spaces to make it accessible to PWDs and to upgrade their equipments to make it suitable for PWDs such as putting Braille in keyboards, using email and chat instead of voice calls for call center agents, etc.
Mr. Manuel Agcoili, the second nominee of the Pilipinos with Disabilities Inc. Partylist, which is gunning for a seat in Congress next year, said that PWDs working in ICT will meant that PWDs will no longer be working in saturated cottage industries such woodworking and crafts. With their IT talents and skills, PWDs can be at par with non-PWD workers. He gave credit for the IT and BPO boom for this development.
Considering the high attrition rate in BPO and IT companies, Mr. Agcaoili gave one more reason why employers should hire PWDs is that will remain loyal to them.
He also advised companies not to look on the disability of the PWD but on his abilities. He, however, doesn’t look at this as discrimination but rather lack of awareness for PWDs by the employers because most non-PWDs are not comfortable relating to PWDs, especially they don’t know to approach and deal with them.
With only a small fraction of the 15M PWD population is working, Emer Rojas, another PWD leader, said that the ITC industry will help to address the employment problems of PWDs.
Another advocacy that real estate and BPO sectors should address is the Universal Design to be applied in office spaces and buildings to make it more accessible to workers with disabilities.
“An accessible building will have features that enable PWDs and those with mobility challenges to make use of the primary functions for which a structure is built,” Ms. Adela Kono, an expert in Universal Design, said. “In short, the building must allow a person with a severe disability to stay and pursue a meaningful endeavor, be it education, employment, recreation, tourism, etc.”
She also added that “A building is accessible when it allows for maximum independence on the part of the PWD to have no or little need for assistance from a personal assistant or a co-worker. An accessible building, from an infrastructure point of view, should allow as much as possible non-PWDs to co-exist with PWDs without non-PWDs noticing much difference about our presence.”
Real Estate Professional, Mr. Ramon C.F. Cuervo III’s advocacy as a Realtor and Professional Consultant is to challenge developers to see the potential market and meet the demand for office and commercial buildings that are PWD friendly.
“I, myself, as one with the PWDs, experience the day-to-day difficulties and challenges brought about by structures that are not fit for PWDs,” he said. “Let’s all support the PWD awareness and advocacy, especially in solidarity of the upcoming Asia Pacific Decade of PWD from 2013 to 2022.”
- Roque Sorioso
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