BPOs drive office property market

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The Philippine office segment has a lot more room to grow if seen from the ex­perience of business process outsourc­ing (BPO) powerhouse, India.

According to property consultancy firm CBRE, the country’s office market has yet to be in the same level of development as that of in India.

Rick Santos, chairman of CBRE Philippines, said the Philippines is a decade late in becom­ing a formidable force in the non­voice offshore outsourcing, a business which India developed early on.
“We are where India was in the office sector about 10 years ago. We are 10 years behind In­dia in terms of where we actually are in terms of trajectory,” said Santos in a presentation to members of the Asia Pacific Real Estate Associa­tion (APREA) in the Philippines.

Santos noted that while Manila and Cebu are among the top outsourcing destinations in the world, the list of the top destinations is dominat­ed by India, with six of seven being Indian cities.

With 6 million square feet of office space expected to be leased out for the year, the Phil­ippines continues to have a strong presence in the global BPO industry, according to Santos. “(This) is three times that of Singapore, and 30 percent greater than that of Japan,” he added. “Not only do we have some of the best workers, (we also have) the most skill. It’s also extremely cost-effective,” he said.

Santos noted the prevailing rent in the country of $26 per square foot per annum makes the Philippines one of the cheapest destinations to be in for a global company.

Rents in Hong Kong can go as up as $280, and that rate, Santos said,” drives the cost of everything.”

The BPO industry is seen to grow its revenues to $26 billion by 2016, which would be bigger than the projected $25 billion remittances from overseas Filipinos.

“The BPO sector is growing faster than remittances,” said Santos.

Santos said just like in India, the property sector in the Philippines is poised to bloom further because of the BPO sector.

Santos said the growth of the BPO seg­ment should “kickstart” the growth of other brick and mortar business as well.

“Based on what we see in India, it’s not just the BPO (that will benefit from the property boom), it will also kickstart the front ­office. You will see an exponential growth in a matter of years,” he added.

Santos said that among the industries that could take the lead from the BPO growth are insurance, medical, logistics/manufac­turing, environmental consultancy, food and beverage, banking and finances and electronics, among others.

By: Albert Castro, Malaya, April 3, 2014

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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