The ongoing moratorium on establishing new economic zones in Metro Manila is significantly limiting the flexibility of IT and business process management (IT-BPM) firms in choosing their office locations. According to Savills Philippines, this restriction could have long-term implications for the sector.
Impact on IT-BPM Companies
Cha Carbonell, Chief Operating Officer at Savills Philippines, highlighted that while Metro Manila's office market exhibits a vacancy rate of about 20%, this figure sharply decreases when factoring in the stringent requirements of multinational corporations (MNCs) and business process outsourcing (BPO) firms.
What we are seeing instead is a more structured migration rationale toward secondary districts, driven by... employee accessibility, cost arbitrage, and BCP considerations.
Cha Carbonell, COO, Savills Philippines
- 478,000 square meters of PEZA-compliant office space in core business districts
- 30% vacancy rate for non-PEZA, non-green buildings
The moratorium stems from Administrative Order No. 2018, which was implemented to redirect investments towards areas outside the capital. However, industry leaders argue that this policy may no longer be suitable given the current demand for high-quality, PEZA-accredited office spaces.
With only 711,000 square meters of PEZA-certified office space expected to be available in the coming years, the supply shortage is likely to worsen. This has raised concerns about the future viability of Metro Manila as a competitive business hub.
Carbonell further noted that large locators are reluctant to relinquish PEZA incentives, which are crucial for maintaining operational viability. As a result, many firms are exploring secondary business districts, where rental costs are significantly lower.
The implications of the moratorium could extend beyond the immediate market, potentially affecting the overall economic landscape of the Philippines, especially as Metro Manila remains a primary driver of the IT-BPM sector.