Sustained growth expected

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Business World

By: Franz J. G. de la Fuente

April 24, 2013

 

INDUSTRIAL, office, and residential sectors in central Luzon — particularly in the Clark and Subic Bay Freeport zones (CFZ and SBFZ) — are expected to sustain growth in the second half, spurred by robust demand and business expansion backed by infrastructure development, a real estate services firm recently said.

“The development of infrastructure has fueled the strengthening of Central Luzon’s economic fundamentals. With all of these infrastructure developments and promising macroeconomic indicators under way, the North Luzon Urban Beltway is poised to be the next major investment destination of the country,” CB Richard Ellis Philippines, Inc. (CBRE Philippines) said in its second half Central Luzon MarketView report on Tuesday, with the North Luzon Urban Beltway referring to the central Luzon cities of Olongapo in Zambales, and Angeles, Mabalacat, and San Fernando in Pampanga, where the SBFZ and CFZ are located, respectively.Accessibility to central Luzon, for instance, has vastly improved with the renovation of the North Luzon Expressway and construction of the Subic-Clark-Tarlac Expressway and Clark International Airport, while on the rise are two major economic hubs: the 177-hectare Global Gateway Logistics City, and a 304-hectare leisure tourism estate by Korea-based Donggwang Clark Corp.For the industrial segment, manufacturing firms are further encouraged to locate in the area by the tax perks provided by the government in the two Freeport Zones.“Although the developments in infrastructure and the strong regional economy are major considerations of businesses, the fiscal and non-fiscal incentives offered to manufacturing locators in the Freeport Zones of Clark and Subic remain to be the deal clincher for exporting investors,” CBRE Philippines noted.

At present, vacancy rates for industrial spaces are at single digits — 6.81% in CFZ and 7% in SBFZ — with lease rates pegged at an average of P123 per square meter a month in CFZ, and P95 to P240 square meter a month in SBFZ, figures which reflect a growing manufacturing sector.

“The manufacturing industry is experiencing renewed growth which has boosted occupancy for industrial spaces in Clark and Subic Freeport Zones.

Lease rates are expected to remain stable as the anticipated demand will be met by the available supply of land. High investor confidence and continuous efforts in good governance will be able to take the market to great length,” the report read.

Meanwhile, the recently passed Philippine Economic Zone Authority (PEZA) Board Resolution 12-329, which halts fiscal tax incentives to new developers in Metro Manila and Metro Cebu, has served to boost the office segment in CFZ on top of the incentives currently granted by state-run Clark Development Corp.

As of end-2012, CFZ registered a low vacancy rate of 6.54% of the total 126,589 square meters of leasable office space there, the report stated.

“The PEZA resolution has emphasized Metro Clark as a high potential investment destination. The large talent pool combined with developments in infrastructure of the region has helped in sustaining growth. With the entrance of new locators and expansion of previous tenants in the BPO (business process outsourcing) industry, the real estate office segment is seen to expand in the coming years,” CBRE Philippines said.

On the other hand, the influx of offshore investments has resulted in more expatriates in the CFZ, prompting more property developers to pour in investments there.

“Foreign investments entering CFZ have affected the residential landscape of the North Luzon Urban Beltway. An increase in expatriates and on-site working for the different locators raised the demand for quality residential developments, placing the pressure on developers to increase supply,” CBRE Philippines said, noting that to date, there are four subdivisions and two condominiums in CFZ totaling roughly 1,076 residential units, mostly catering to expatriates working in CFZ.

“Residential demand is seen to grow with the upcoming investments and expansion in the CFZ. Vertical residential developments are now seen rising in the area as developers try to maximize their investment on land,” the report added.

As of 2011, average residential occupancy in CFZ stood at 90%, mostly consisting of subdivisions with leasable lots measuring 50 to 400 square meters on average, and with lease rates ranging from P26,000 to P70,000 per month.

CBRE Philippines started operations in 1998, offering valuation and advisory services, global corporate services, asset services and residential services. Its parent, CBRE Group, Inc., is a Los Angeles-based property services firm with over 300 offices and 37,000 employees worldwide.

 

 

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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