Developers urged to build more office spaces in Davao City

Property developers should build more office spaces in Davao City amid anticipation of pent-up demand from outsourcing occupiers, a professional services and investment management firm said.

In a recent report, Colliers Philippines said a limited new supply of office space will be completed in Davao from 2022 to 2024, after posting an annual average delivery of 27,300 square meters (sqm) from 2018 to 2021.

It projects an annual delivery of 6,100 sqm of new supply from 2022 to 2024, with the completion of The Uprise – Felcris Centrale Building C Expansion.

By the end of 2024, Colliers forecasts Davao’s office stock to reach 371,700 sqm.

“Colliers encourages developers to build more office towers in anticipation of pent-up demand from outsourcing occupiers,” it said.

“Developers may also incorporate green and sustainable features in their buildings such as filtered air circulation systems, touchless elevator access and vertical gardens. In our opinion, this should further attract traditional and outsourcing occupiers, as well as improve occupier retention,” Colliers said.

It added that in the first half of the year, the majority of the roughly 84 percent of the office deals recorded in Davao were from outsourcing firms.

“Office deals in Davao as of the first half of 2022 reached 23,500 sqm, up 176 percent from only 8,500 sqm a year ago,” Colliers said.

Some of the notable deals included those of Nearsol, Open Access,Transcom, Shearwater, and Anflo Group of Companies. These firms occupied spaces in Robinsons Cybergate Delta 2, Matina IT Park Building 3, Damosa Diamond Tower and Davao Finance Center.

For the remainder of the year, Colliers sees greater office space take-up from outsourcing, as well as traditional firms.

“Davao returns as one of most feasible BPO expansion locations outside of Metro Manila as seen in strong transactions activity. Additional office stock may already need to be planned out to anticipate sustained demand in the city,” said Colliers Philippines associate director for office services-tenant representation Kevin Jara.

The professional services firm said Davao is one of the most competitive cities in Mindanao, making it a preferred location of multinational outsourcing companies.

It emphasized that the city is also regarded as one of the safest localities in the region, an appealing proposition for expatriates.

“Colliers Philippines believes that the city’s skilled manpower will continue attracting outsourcing locators. This should be supported by the coordination of the city’s business groups, information and communications technology (ICT) councils, and academe,” it said.

It also expressed optimism on the development of more integrated communities in the city post-COVID-19, which should result in the construction of newer and more sustainable office spaces.

“In our view, tenants should be on the lookout for the completion of these high-quality office spaces especially as they firm up their return-to-office plans for their employees,” Colliers said.