Colliers Philippines’ recorded 221,100 square meters (sq.m.) of office deals outside Metro Manila last year, nearly double the 113,100 sq.m. posted in 2021.
Cebu accounted for about 60 percent of total provincial transactions followed by Davao (17 percent), Pampanga (12 percent), Bacolod (three percent) and Dumaguete (three percent).
“Colliers Philippines believes that cities such as Cebu will remain popular among outsourcing firms planning to expand operations outside of Metro Manila. Over the near to medium term, this interest should be sustained by quality infrastructure, skilled manpower, and local government competitiveness,” the company said.
Among the notable deals in 2022 include spaces taken up by Wipro, Concentrix and Avant Offices in Cebu, Alorica in Davao, Ubiquity in Bacolod and Laguna and Asurion and Infosys in Pampanga.
“In our view, some of these firms have been expanding outside Metro Manila due to attractive rents as well as the availability of high-quality office spaces and skilled manpower,” said Colliers.
Outsourcing firms dominated transactions, covering nearly 70 percent of total provincial deals while traditional firms also continue to take up space, occupying offices ranging between 200 and 2,500 sq.m. Traditional firms engaged in logistics, financial and flexible workspace operators were among the office space demand drivers in 2022.
With the popularity of hybrid work arrangements, Colliers encourages landlords to consider developing more flexible workspaces in key sites outside Metro Manila such as Cebu, Iloilo, Davao, Cagayan de Oro, Pampanga and Dumaguete as these locations have relatively low flexible workspace stock and vacancy compared to Metro Manila.
Colliers said it has observed a growing interest for flexible workspaces in these locations from expanding traditional outsourcing firms as well as startups using co-working as incubation spaces to capture future growth from startups.
Meanwhile, the company added that developers complete delivery of their projects as scheduled as it observed increasing inquiries from outsourcing firms, especially in Iloilo, Bacolod, Bulacan and Laguna.
Colliers expects the completion of about 380,000 sq.m. of new office space in Cebu, Pampanga and Iloilo from 2023 to 2024.
Potential demand in key cities are also observed in Iligan, Dagupan, Urdaneta, Malolos, General Santos, Tarlac, Cabanatuan and Puerto Princesa as these locations are touted as high potential areas for “transformation into digital cities by 2025,” according to the Information and Business Process Association of the Philippines. At present, these areas also serve as popular sites for freelancers.