Why BPOs may soon set up shop near residential areas

Posted at 05/13/14 9:28 AM

MANILA, Philippines - Many business process outsourcing (BPO) companies are now concentrated in Makati or Fort Bonifacio, but some may soon be moving closer to where their employees live.

International property consulting firm JLL (formerly Jones Lang Lasalle) is seeing a new trend -- BPO buildings being developed in non-central business district (CBDs) areas, particularly those near "bedroom" communities in Quezon City and Mandaluyong.

Philip Añonuevo, JLL Philippines associate director for markets, said the continued strong demand for BPO office space in Metro Manila and rising office rents in CBD areas are fueling this trend.

"The scenario right now in terms of CBDs is the rents are going up - developers are building these (BPO) buildings and these are leased out in a short period of time, between 6-12 months, so rents are going up," he told ABS-CBNnews.com

"So we have these high net worth individuals who have properties located in non-CBD areas, some in Mandaluyong and some in QC. So they've joined in the bandwagon in the BPO space by developing their non-CBD properties into commercial areas (for BPOs)."

Establishing a BPO office in a non-CBD location has its advantages.

First, the rents are attractive compared with CBD locations such as Ortigas, Fort Bonifacio and Makati.

"They're probably 20 percent less than the nearest CBD area which is Ortigas, and at least 30 percent less than the prime CBDs of Bonifacio and Makati. They offer an incentive, cost-wise to BPOs," Añonuevo said.

BPO employees, who live in Quezon City and Mandaluyong, also have the advantage of going to work near their homes, or having easy access to public transportation. The new BPO buildings are located near train stations or jeepney routes.

"There's ease of commuting for BPO workers. They like to be two stops to and from work," he said.

An example of this is the Anonas LRT City Center, a mixed-use building located along Aurora Boulevard, Quezon City and near the LRT-2 Anonas Station. Metro Gaisano occupies the ground floor to third floor, while the fourth to seventh floors are designated for BPO offices.

Other examples include Spark Place along P. Tuazon Boulevard in Cubao and Shaw Center along Shaw Boulevard corner Nueve de Febrero in Mandaluyong City, which cater to BPO companies.

Spark Place, located in Araneta Center, is an 11-storey building with 7 office floors to cater to BPOs. On the other hand, the 9-storey Shaw Center also has a mall, commercial space and 12,500 square meters of office space. It is strategically located near residential communities in Mandaluyong and San Juan.

"If this becomes successful, we may see more of this. It reduces the travel time of employees, and at the same time the cost is competitive," Añonuevo said.

To suit the BPO companies' requirements, the buildings offer high-density and can support 24-hour operations. The buildings also typically have retail and commercial establishments to cater to the BPO employees.

"They have to operate 24/7, no interruption. The building has to have its own generators... Time is very important, so it has to be high-speed elevators... Transportation, there should be no flooding in the area because their people have to be able to go to work during rainy season," Sheila Lobien, director and head of project leasing at JLL Philippines, said.

Lobein noted the BPOs look to establish their operations in good locations so they can retain their employees. "They have to create a good environment for their people. The better the location, the more they can retain their people as well," she said.

However, BPO companies are not likely to leave Fort Bonifacio or Makati as their base. Instead, they will most likely choose Quezon City and Mandaluyong for their second, or even third locations.

"Tenants will still go to Fort Bonifacio and Makati. But there are those who will start choosing Quezon City and Mandaluyong as second locations," Añonuevo said.