MANILA, Philippines — The vacancy rate of the Makati Central Business District continues to drop and, as of end of 1st Quarter 2007, is pegged at 1.3%. The reason behind this drop is that after the build-to-suit office buildings had been built by Ayala Land for Convergys and People Support, there has not been any new office building coming on-stream in Makati to augment the dwindling supply plus the continuous take-up of space from BPO companies, both from new entrants and expansion.
In fact, there is no new office building for completion in Makati CBD for 2007. All new supply is coming from emerging business districts such as Bonifacio Global City in Taguig, the Bay Area, Pasay City, and Cebu Business Park & Asiatown IT Park in Cebu City.
After a series of residential condominium developments, Bonifacio Global City is getting it share of office projects. Mar-Nol Realty is completing its newest office project – Fort 26th – with gross leaseable area of 16,000 square meters ready for occupancy by the 1st Quarter of 2008. This new Grade A office building will address the office demand of corporate locators. As of yearend of 2006, the total leasable office space in Fort Bonifacio stood at 75,000 square meters, with an additional 63,500 coming on-stream by yearend of 2007.
Less than a kilometre from Bonifacio Global City is McKinley Hills IT Park being developed by Megaworld Properties, which is part of a 50-hectare master-planned mixed-use development accessible either through C5 or Lawton Avenue. Megaworld, on the other hand, is set to complete One McKinley Square, its first IT building catering to BPO locators with an estimated gross leasable area of 25,000 square meters.
On the western side of Makati CBD is the Bay Area within the 1,500 hectare reclamation project of the government. Two prominent developments in the area are the SM Bay City and Federal Lands Metropolitan Park.
After the successful opening of SM Mall of Asia, SM Investments is introducing complementary developments in the SM Bay City complex, which include a convention center, a hotel, and a facility catering to BPO companies. The SM eCOMCenter, estimated 94,000-square meter area to cost P1.5 billion, will have a total leasable area of 67,900 square meters, with seven floors earmarked for office space, two-and-a-half floors for parking, and the ground floor for commercial purposes.
Next to SM Bay City complex is the Metropolitan Park, which currently host the Blue Wave Retail Strip, Petron Mega Station and Manila Doctors College of Nursing. Also found in the area is the Bay Garden residential condominium cluster by Federal Land. To complete the initial development phase of the park, Federal Land will also be constructing the Metropolitan Plaza, a five building IT Campus for the BPO occupiers.
Beyond Luzon Island, Cebu City is also getting its share of BPO demand for office space. Aside from the emerging business districts of Metro Manila which are in the peripheries of the Makati CBD, the BPO companies have expanded and are continuing exploring expansion options to the south to take advantage of the pool of qualified labour in the Visayas-Mindanao area.
The emerging business districts within Metro Manila and Metro Cebu acts as a cushion to the sudden increase in demand for office space from the BPO companies. These alternative locations will prevent the rental rates in traditional CBD (i.e. Makati and Ortigas) from shooting up beyond the pre-crisis levels.
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