Cebu emerges as top choice for outsourcing, multinational firms: Colliers
CEBU CITY, PHILIPPINES — Cebu City is increasingly becoming the preferred destination for outsourcing firms and multinational companies (MNCs) who are looking to expand to the Philippines.
In its latest market report, property consultancy firm Colliers revealed that Cebu City’s office space market has shown robust activity in 2023, with net absorption reaching 65,800 square meters (sq.m.). Despite a slight dip in new supply from the previous year, demand from traditional and outsourcing firms continues to drive the market.
About 208,800 sq.m. of office space transactions were made outside of Metro Manila, with Cebu accounting for 54% of 112,900 sq.m. of these transactions.
Nearly 75% of these Cebu deals were dominated by outsourcing companies that took up space in the Cebu IT Park, such as Concentrix, OfficePartners 360, Avant, TOA Global, and Optum.
By the end of 2023, the vacancy rate for flexible workspaces in Metro Cebu had also fallen to 20%, a notable decrease from the 27% vacancy rate in 2022. Flexible workspace providers, including BPO Seats, Avant Offices, and Regus, responded to the growing demand by expanding their presence with new locations.
Colliers projects a net take-up of 72,000 sq.m. this year, with significant contributions from shared services, healthcare companies, and other MNCs.
The firm also forecasts the delivery of 107,900 sq.m. of new office space in 2024, with more than half coming from the reclamation area. From 2024 to 2026, an annual addition of approximately 74,500 sq.m. of new space is expected.
Despite a modest 0.4% increase in rents in 2023, rates are anticipated to stabilize in 2024 amidst elevated vacancies and subdued demand in key submarkets.
The vacancy rate continued to decline, reaching 20.4% in the last quarter of the previous year. However, due to the influx of new office spaces, the vacancy rate is expected to rise slightly, pegged at 21.3% for this year.
Colliers emphasizes that Cebu’s office market will likely favor tenants, offering them the opportunity to benefit from higher-quality office buildings, a skilled labor pool, and enhanced infrastructure.
“This should provide an opportunity for tenants to take advantage of the better quality of office buildings, skilled labor pool, and improved infrastructure,” Colliers stated, highlighting the need for landlords to remain proactive in enhancing their properties to meet the evolving demands of discerning tenants.
Colliers previously reported that Cebu will remain an attractive hub for BPOs seeking new sites to accommodate business growth due to the city’s availability of quality office spaces at favorable lease rates.
