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BPOs Favor Campus-type Developments

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Low-rise Building

The main driver for commercial real estate in Metro Manila over the past five or six years has been the outsourcing industry.

With over 200 companies in more than 250 locations — and still growing — they are positioned to occupy a lion’s share of all office space. Most of these outsourcing companies are located in high-rise buildings. This is more of a reactive solution rather than a matter of preference.

Circa 2001, the business districts of Makati and Ortigas were grossly over-supplied. Outsourcing companies locating in these areas took the logical and most convenient solution: They located in built, semi-fitted, rent-discounted buildings.

The result is where we find ourselves today. A great number of outsourcing companies are located in the high-rises of Makati, Ortigas, and Eastwood.

But did you know that most outsourcing companies actually prefer to locate in low-rise, campus-type developments? Usually, 6-12 storeys clustered in a given area with lots of greenery, mimicking a college campus, hence the term.

How Efficient Is a Floor?
Efficiency and density are among the main drivers. In the sample floor plate shown, the small squares represent the columns that support the building. The slightly larger boxes marked with Xs represent elevators. In the lease agreement, what is paid for is the entire space bordered by the rectangle, representing the floor plate. As shown in the diagram, not all of the leased space is usable. The quotient of usable area divided by leasable area will result in the efficiency of the floor.

Floor efficiency directly affects the density or number of people that can occupy the area. The more people a floor can accommodate, the more cost-effective it is for the outsourcing company.

High-rise buildings require larger (or more) columns to support the structure. They also need more elevators to transport occupants, lowering the efficiency of the floor or leased area.

Other factors that favor low-rise structures include time to transport people from floor to floor, increased floor loading, air-conditioning, and a better overall environment, among others.

This principle can also benefit developers. Instead of building high-rise projects (which will shock the market with 60,000- to 100,000-square-meter sky-scrapers!), low-rise, low-density, campus-type develop-ments allow for phased construction.

In the pictured site development plan, the developer has the option to build and fully lease the first building. When it is completely leased, it can move on to the next building. In the event the next building is not leased, it can hold or delay the next project, thus reacting to the market’s absorption.

If this were a high-rise, the developer would have to commit to build the entire project. He would be unable to halt construction midway.

Therefore, over the next couple of years, major rise developments more developers who want to capture the growing business and more process outsourcing market — while, at the same time, mitigating risk — will tend towards greener, lower density, campus-type developments.

print ed: 11/07

 

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