Provincial office market faces 2017 oversupply, lack of talent


The office property market is expected to continue its expansion outside of Metro Manila this year, but challenges of an oversupply and lack of qualified talent for the outsourcing sector are expected to linger for the next six years, Leechiu Property Consultants (LPC) Chief Executive Officer David Leechiu told The Manila Times.

In a recent interview, Leechiu said that about 120,000 square meters of office space was taken up by the Business Process Outsourcing (BPO) sector in the provinces in 2016.

“We’ve brought companies to Ilocos Norte, to Puerto Princesa, to Bataan, to Davao, and Cebu,” Leechiu said.

Leechiu said that the firm has also done transactions in Batangas, Calamba, Cavite, Laguna, Tarlac, and Pampanga.

“So unprecedented expansion in the provinces also,” Leechiu said.

The expansion of BPO locators to the provinces is a trend that will continue in the coming years, according to Leechiu, as firms look to set up back-up offices or recovery centers.

“I see that interest for the provinces will remain very strong because companies have [already]expanded in Manila and many of them will want to go to the provinces, so they can keep expanding in the Philippines and address the concentration risk of being in just one area,” Leechiu said.

Based on a report by LPC, a total of 1.43 million square meters of new office space will be created in the provinces between 2016 and 2022.

Cebu accounts for the bulk of the upcoming supply, 457,000 square meters or 32 percent of the total. This is followed by the CALABARZON region with 308,416 square meters or 22 percent of the new supply.

Meanwhile, a total of 103,900 square meters is set to enter the Davao office market.

Oversupply expected
With the huge supply set to enter the provincial office market in the coming years, LPC said is an oversupply of office spaces is expected, based on the projected employment demand from BPO firms.

Citing data from the IT and Business Process Association of the Philippines (IBPAP), LPC said 30 percent of the 1.8 million full-time workers employed by the BPO sector by 2022 will be located in the provinces.

As of the fourth quarter of 2016, full-time employees in the provincial BPO industry amounted to 361,573. This is expected to rise to 496,320 full-time employees by 2022.

“The increase of 37 percent or 135,000 full-time employees by 2022 translates to 730,100 square meters of office space demand,” LPC said.

This would result in an oversupply of about 700,000 square meters, according to the real estate services firm.

Tight labor supply
Apart from the expected oversupply, another challenge faced by the provincial BPO market is the lack of qualified labor, according to Leechiu.

“Because as more and more companies go to theses provinces, it becomes harder and harder to find qualified labor,” Leechiu said.

In addition, Leechiu emphasized that the lack of qualified talent is also a result of people opting to come to Manila to work instead of staying in the provinces.

“At this point, although there are more provinces now under consideration by the BPO industry, the talent remains very shallow,” Leechiu said.

Leechiu, who is part of the Board of Trustees of IBPAP, said the organization is working on projects to address the labor problem.

“One of our main projects for the next six years is how to develop talent in the provinces so that the BPO industry will continue to grow in the provinces,” Leechiu explained.


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