This week, Colliers Research provides insights on co-living spaces or dormitory-type accommodations as office workers gradually return to on-site work as Covid-19 cases continue to decrease; the Philippines as an attractive manufacturing site for Japanese medical devices and equipment companies; and the completion of Cebu Landmasters’ BERDE-certified Latitude Corporate Center and why Metro Cebu (and other provincial locations) is fast becoming an attractive location for BPOs.
BigPat on track to complete 2 projects in 2022
BigPat Development is expected to complete two mid-rise dormitory buildings both located in Makati by the second half of 2022, offering budget rental accommodations. The two buildings, namely Araro Building and Honda Building, will have seven storeys and will offer 90 and 70 studio units, respectively. BigPat Development describes itself as an “affordable high-rise developer,” with already two flagship dormitory projects both located in Pasay.
In our view, co-living will be a popular option among employers and their workers in Metro Manila beyond 2021 with the return of on-site operations and traffic situation reporting back to pre-pandemic levels. As of 9M 2021, Colliers recorded about 7,200 co-living beds in key business hubs including Makati CBD, Bay Area, and Fort Bonifacio. We see an additional 6,000 beds in these areas from 2022 to 2023. Colliers recommends that co-living operators upgrade their amenities that will suit tenant requirements, including high-speed Internet connection and discounts on utilities and cleaning and laundry services. We also encourage operators provide attractive lease terms to tenants, including discounted rental rates for long-term contracts of between 6 and 12 months.
Electronics anchors PH medical device industry
The Board of Investments has encouraged Japanese companies to invest in the country’s medical devices industry by making the Philippines as a site for the manufacture of medical devices and equipment. Japan is the third largest market in the world in terms of medical expenditure. Some of the world-class Japanese medical devices companies in the country include Arkray, Terumo, JMS Healthcare, Atomed, Yokoisada, and Tokai Medical Products. Medical products that are currently being produced and exported by the Philippines include syringes, ventilators, IR thermometers, and personal protective equipment, among others.
In 2022, Colliers sees warehouse and land lease rates to increase by 3.0% and 2.8%, respectively. In our opinion, demand will increase once investments in the sector materialize. Data from the Philippine Statistics Authority showed that foreign direct investments committed to fund manufacturing projects amounted to PHP2.3 billion (USD45 million) in Q2 2021, up 31% YOY. We recommend that industrial park developers monitor the investments approved by Investment Promotion Agencies to assess their requirements. Developers should also modernize their facilities to attract firms and differentiate themselves from competitors.
CLI completes new P1.2 billion office tower
Cebu Landmasters Inc. recently completed the PHP1.2 billion BERDE-certified commercial tower Latitude Corporate Center in Cebu City. The new office tower will have a gross leasable area of 15,000 square meters and will cater to local and multinational companies, including banks, technology service providers, real estate, food and retail industries, and IT-BPO companies. Latitude is one of the tallest buildings in Cebu Business Park and will offer 83 office units ranging from 51 square meters up to 2,000 square meters, and 247 parking slots.
Colliers sees continued space absorption of new office spaces outside Metro Manila. As of 9M 2021, we have recorded provincial deals covering 22% of total transactions in the Philippines. Cebu leads provincial office transaction during the period at 26,000 square meters, followed by Iloilo (16,000 square meters), and Pampanga (11,000 square meters). Colliers recommends that landlords be proactive in identifying demand outside of Metro Manila. We see more firms, specifically outsourcing companies, locating outside the capital region as they take advantage of the tax and non-tax incentives offered by the government. Colliers also sees more landlords adopting green and sustainable office spaces. Features such as natural lighting and optimize air quality should result in utility and talent acquisition cost savings, and improved workforce productivity. We see this trend complementing recovery in office leasing demand beyond 2021.