Iloilo, Bacolod Emerging as Key Office Markets

By Joseph Bernard A. Marzan

The Cities of Iloilo and Bacolod are poised to become significant players in the office space sector in 2025, driven by increasing demand from tech-based enterprises.

David Leechiu, Chief Executive Officer of Leechiu Property Consultants, Inc., said during an ANC Market Edge interview on December 16, 2024, that despite the integration of artificial intelligence (AI) in the Information Technology-Business Process Management (IT-BPM) sector, the demand for office spaces remains robust.

Data from Leechiu Property Consultants revealed a demand for 1.1 million square meters of office space, although vacancy rates are high due to the construction of newer buildings.

Leechiu projected that equilibrium in the office market would be achieved in three to four years.

“AI empowers one person to do the job of three people, reducing space needs, but this is offset by the increased volume of work being outsourced to the Philippines. This keeps office market demand, particularly from IT-BPM firms, on the rise,” he said.

The firm’s 2024 report ranked Iloilo third in office space demand, accounting for 19,000 square meters, with 84% attributed to IT-BPM firms.

This represented 8% of the 231,000 square meters of office space demand outside Metro Manila, led by Cebu with 113,000 square meters and Clark, Pampanga, with 35,000 square meters.

For 2025, Leechiu identified Iloilo, Bacolod, and Bohol as the major markets where demand exceeds supply.

“Iloilo and Bohol are markets where supply is struggling to meet demand. There’s a strong need for office spaces in these areas,” he added.

Leechiu predicted the Philippine property market would return to pre-pandemic levels by 2027 but cautioned that global uncertainties, including wars and economic instability, could pose challenges.

“Stimulus programs in countries like China and Japan, and eventually Western Europe, aim to avert crises and generate jobs in outsourcing hubs like the Philippines. Offshoring will become an urgent need through 2030, keeping us optimistic about office demand projections,” he said.

 

Local Growth and Challenges

Jessraf Palmares, president of the Iloilo Federation for Information Technology (IFIT) and the National ICT Confederation of the Philippines (NICP), agreed with Leechiu’s projections but emphasized that supply is catching up with demand.

He cited recent developments at the Iloilo Business Park and the anticipated completion of the Atria buildings in the Mandurriao district.

Palmares highlighted the relocation of some IT-BPM firms to areas in Mandurriao, Molo, and Pavia, as well as increasing availability of spaces in these districts.

“While inflation and AI are impacting the industry, the availability of local real estate spaces will improve by 2025. Real estate is catching up to meet high demand,” Palmares told Daily Guardian.

Palmares noted that limited supply, including office spaces and skilled workers, hampered growth in Iloilo’s IT-BPM sector in 2024.

“Our growth depends on supply. If we had more spaces and qualified workers, our growth could have been greater,” he said.

Palmares revealed that hiring rates in the IT-BPM sector remained at 12% to 14%, which he deemed low, with the number of graduates failing to meet industry demand.

“The industry has started rationalizing hiring requirements, even accepting Senior High School graduates to cope with demand,” he added.

As of April 2024, IFIT data indicated that Iloilo was home to 118 IT-BPM firms employing more than 42,700 people.

 

Push for Development

Iloilo City Mayor Jerry Treñas has been urging property developers to build on idle lands to meet the increasing demand for office spaces.

He said he has been in talks with Ayala Land, SM Investments Corporation, and La Filipina Uy Gongco Group, among others, to discuss expansion plans.

Treñas revealed that Megaworld is set to develop a 20-hectare property in Mandurriao near his residence.

“Ayala Land is constructing two high-rise BPO buildings and a mall near their existing BPO buildings. SM has big plans for the area around SM City Iloilo, including redeveloping their warehouse,” he said.

“La Filipina Uy Gongco is planning a mixed-use development in Lapuz, including BPO offices, residential condos, and a mall,” he added.

Treñas also said he was encouraging Rockwell Land to develop its property along General Luna Street, across the former Sarabia Manor Hotel.