Cebu office sector: From ‘downtown to newtown’

CEBU, Philippines — Over the years, Cebu has seen a massive economic transformation.

And one of the areas that has seen a significant change over the past decades is the evolution of Cebu's office sector.

In its special report entitled "When Giants Invade: National Property Developers Redefining Cebu," property consultancy firm Colliers International traces how Cebu's office sector evolved from "downtown to newtown."

 Traditionally, the office district has been centered in Colon in Cebu's downtown area. Buildings in the area are generally two to four storeys with upper office space provided over ground floor level retail.

Most buildings were built in the 1960s and 1970s by local players. Thereafter, progress in the area has been limited as available sites for expansion have become scarce.

Colon lost its stature as the main office district following the establishment of Osmeña Boulevard and General Maxilom Avenue as the Uptown commercial district. Structures in the area were built in the 1980s and 1990s through to the early 2000s.

In the mid-1990s, the biggest office structure in the Uptown area was the 14-storey Metrobank Plaza Cebu with approximately 10,000 sqm (107,640 sq ft) of GLA (gross leasable area).

By the early 2000s, the Mango Square Mall which included an office component was completed by the Ludo and Luym Development Corp with approximately 14,000 sqm (150,694 sq ft) GLA. 

By the late 1990s, the office market began to gravitate towards the Cebu Business Park (CBP), an approximately 50-hectare site which used to be the former Club Filipino Golf Course.

The majority of the site was purchased by Ayala Land Inc. Located just two kilometers east of the Uptown Fuente Osmeña and three kilometers north east of the downtown Colon area, it was an accessible site that proved to be a highly viable alternative to the Uptown office district. 

The Cebu Business Park was developed by Cebu Holdings Inc, a subsidiary of Ayala Land, in the mid-1990s.

The first office building was completed in 1994, the Cebu Holdings Center, totalling 8,000 sqm (86,11 sq ft) of office GLA. Strata-titled units were sold to occupiers and investors at P30,000 (USD588) per sqm, which was the most expensive at the time.

"Given its size and the subsequent developments such as retail, leisure and hotel, CBP became Cebu City’s premier business location," Colliers said.

   In the early 2000s, the Cebu IT Park (CIT) was also developed, which essentially served as an extension of CBP, being adjacent to the latter. The Globe Telecom IT Plaza by Ayala Land was one of the first office buildings in the CIT.

"Today, the CBP and CIT cover some 60 percent of total office stock in Metro Cebu or about 600,000 sq m  (6.46 million sq ft) of office GLA. Furthermore, the office supply in the next five years will be concentrated in the CBP and CIT corridor," Colliers noted.

But aside from Cebu City, other parts of Metro Cebu are now offering office space to both BPOs and traditional companies. These include the Mactan Newtown developed by Megaworld which is being promoted as the first major township with its own beach outside Metro Manila.

Other developers such as SM and Filinvest have acquired parcels of land in the South Road Properties (SRP) area and will develop integrated communities that are being positioned as Cebu’s next major business hubs. These projects should expand Cebu’s current office stock.

"The demand for office space in Cebu is primarily driven by a dynamic services sector which covers more than half of Central Visayas’ economy. The economic subsegment has been getting a boost from Cebu’s outsourcing sector. The expansion of current Business Process Outsourcing (BPO) and Knowledge Process Outsourcing (KPO) locators, as well as continued influx of new players has been sustaining office space absorption in the city," the property management company further noted.

KPO companies that provide higher value outsourcing services such as health information management, software engineering, and finance and accounting are emerging as major contributors to office space absorption in Cebu.

Colliers believes that Cebu remains the largest and most preferred KPO destination outside of Metro Manila due to the presence of adequate infrastructure, redundant internet connection, ample supply of skilled college graduates, and the high level of urbanization driven by the development of several townships and public infrastructure projects. (FREEMAN)