Araneta Group rethinks planned office building amid business process outsourcing slowdown

MANILA, Philippines — The slowdown in business process outsourcing (BPO) investments in the country has prompted one of the country’s top property developers to reassess plans of putting up new office towers.

The Araneta Group, one of the pioneers in entertainment and leisure development in the country, had planned to develop a BPO complex consisting of five Cyberpark Towers as part of its ongoing redevelopment of the 35-hectare Araneta Center in Cubao, Quezon City.

However, its plans may change should investments in the BPO sector continue to decline.

“Our plan for a five-tower BPO is market-driven, so it depends. If there is a market, we will continue with our plan. However, should there be uncertainty in the sector again, if there will be another slowdown, then we might reassess,” Araneta Center Inc. senior vice president of operations Antonio Mardo said.

“There was some kind of a slowdown in the BPO sector last year because of uncertainties. Now, it is somewhat bullish, so I think it is back again,” he added.

Last year, information technology (IT) investments registered with the Philippine Economic Zone Authority (PEZA) plunged to its lowest level at P15.56 billion.

For the month of January, the slide continued as a total of eight IT projects were registered with PEZA with total value of P529 million, a 73.23 percent decline from 22 projects amounting to P1.98 billion recorded in the same month in 2016.

“Last year, I think BPO sector only got in roughly 500,000 square meters of offices, while POGO (Philippine Offshore Gaming Operator) got almost one million square meters of offices,” Mardo said.

Araneta topped off last week its 31-story office tower, the second of five office buildings it intends to build within the commercial district to cater to the country’s BPO industry.

Mardo said half of the new tower dubbed as Cyberpark 2 is already pre-leased by a major BPO locator and the company is in talks with more potential locators.

Its planned third tower is initially targeted to be launched by early next year, but its use will still depend on market conditions, according to Mardo.

“The project will push through, but the question is for what use. We still want to push the physical development, but what will be the use will be driven by the market. Right now it’s still BPO, but what you envision to be an office building could be residential, a hospital or a school. It all depends on the market, but we want to push our development plan,” Mardo said.

With a total of five office towers initially being planned, the Araneta Center Cyberpark will have a total leasable area of 500,000 square meters covering both commercial and retail space upon completion.

The complex is registered with PEZA, giving its locators tax breaks and other government perks.

The cyberpark complex is part of the Araneta Center redevelopment plan.

John Castello, senior vice president of business development of Araneta Center, said a recently updated masterplan of the commercial district would entail investments worth P40- to P50-billion over the next 10 to 15 years.