24/7 BPO operations spawn growth across related industries

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The Philippine Star

September 13, 2013

MANILA, Philippines – “The city that never sleeps” is no longer an adage monopolized by New York City, as numerous other metropolitan centers have sprouted in countries all around the globe that have attuned themselves to a round-the-clock business, commercial and social lifestyle.

Manila, about 14,000 kilometers east of North America, is one of such many emergent cities with a booming call center or business process outsourcing (BPO) industry that has spawned attendant changes in the way people live, work and recreate, according to leading real estate consultancy CBRE Philippines.

Primarily, the local BPO industry has long been identified as one of the main drivers of the Philippine property market in recent years. The office market is dominated by BPO demand, composing as much as 80 percent of yearly take-up. According to data from CBRE Philippines’ Metro Manila Marketview report for the second quarter of 2013, brisk expansions among global firms during the period caused overall office vacancy rate in Metro Manila to drop to 2.51 percent from the previous quarter’s 3.21 percent, amidst supply pressures.

Take up from multinational and BPO companies was likewise observed from new tenants in Prime and Grade A offices during the second quarter. “Outlook for the office market remains optimistic for the rest of the year, and increasing office space demand from multinational and BPO companies shall sustain the office market,” says Rick Santos, chairman and founder of CBRE Philippines.

The BPO boom has led to the popularization of the term “night shift,” which was previously only usually associated with security or law enforcement jobs. “Philippine society, particularly the young professionals, has indeed experienced a radical lifestyle change,” explains Santos. The retail sector is one of the main benefactors of this change, as stores that used to operate only until late at night now operate a full 24 hours a day, and even on local holidays.

Commercial convenience stores and coffee shops that cater to customers round-the-clock have become staple tenants in commercial spaces of office buildings, with global chain 7-Eleven and local pioneer Ministop being some of the top players in the market.

Family Mart, a Japanese convenience store chain brought into the Philippines by the Rustan’s Group and Itochu, is one of the new establishments with 24/7 services catering to BPO employees, as well as a market segment of middle-class office workers.

The consumer lifestyle shift and increased income of the labor force in business centers, especially those in the BPO sector, sustained the expansion of convenience stores near offices while concurrently strengthening ground floor retail trend. Low vacancy rating was sustained in Q2 2013 at around the five- percent level. This year, the expected completion of approximately 432,000 square meters of additional gross leasable area will ease supply pressure. Retail market businesses will remain profitable for the remainder of the year due to a strengthening Philippine economy driven by the growing BPO industry, OFW remittances, and strengthening middle market that can sustain the operations of retail establishments, according to Santos.

Shifting work schedules have also proved to be a benefit to the residential property market near business centers. “Employees under such schedules find it more safe and convenient to rent or purchase condominiums or apartments near their workplace,” points out Santos.

“It is clear that this lifestyle change brought by the growth of the BPO sector is enlivening the economy and the property market in more ways than one,” he concludes.

http://www.philstar.com/business/2013/09/13/1202991/24/7-bpo-operations-spawn-growth-across-related-industries

Orion Support Incorporated (OSI)

Dear Rick,

Following up from my initial request to you for support in finding a new office location for our company, Orion Support Incorporated.   Well, we moved in to the LTA Building on Perea Street, fifty meters or so from Paseo de Roxas this weekend, only a 4 minute walk to AmCham and under excellent terms.

While I think you assigned both Morgan Mcgilvray and Sherdil Rana to support our original request; as you know, Morgan was very tied up with his wife giving birth during the period we identified this location and negotiated with the landlord, Mr. Mike Arroyo. Yes, the former First Gentleman. But in my short interaction with Morgan, I can see that he is a solid, young professional.

With regards to Sherdil, I want to tell you that with 35+ years of interviewing hundreds and hundreds of individuals, I was impressed with his professionalism, focused support and “can-do” attitude  from the point of identifying our potential office space, and through the negotiation stages prior to the signing of our 6 year contract.  I was impressed with his considered opinions, insightfulness with regards to Philippine business culture and his sage advice related to our strategy in the negotiation process.  Sherdil was able to negotiate a rental rate per square meter about 150 – 200 pesos less than the going rate in this area, and with only a 7% increase after 24 months. Add to that, he secured for us three parking slots at no additional cost, two months security deposit versus the standard three, and two months advance rent to be applied to the front end of our contract versus the back end as is the case in most rental contracts. And, he got the landlord to repaint the entire office with three coats of mildew resistant paint at their expense.   But best of all, we were given a 6 year lease, with only having to give two months notice and forfeit only our two month security deposit to move out anytime with no additional penalty!

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