Colliers: Export sector drives demand for industrial spaces in Metro Cebu

The demand for industrial space and facilities in Cebu was seen to be sustained by the continued dynamism of the local export sector, according to property management and research firm Colliers Philippines.

Colliers, in a report released on Wednesday, said Cebu remains as a major hub for industrial operations outside of Luzon.

“The Philippines’ total exports from January to June 2017 rose by nearly a fifth to $31 billion with Cebu (as) a key contributor to the country’s export bill,” Colliers research manager Joey Bondoc said.

Bondoc said that they see Cebu’s export sector being driven by the economic recovery of the Philippines’ top trading partner, the United States; implementation of trade deals with neighboring Association of Southeast Asian Nations (Asean) economies and the Eurozone; as well as sustained manufacturing investments from Japan and China.

For Colliers, these should contribute to greater absorption of space within Cebu’s industrial parks.

The Philippines continues to attract more foreign and local investments with manufacturing being among the major recipients of fresh equity investments, the research firm added.

Colliers said this positive trend is attributed to continued investor interest on the back of sound macroeconomic fundamentals.

“The continued surge of investments funneled into manufacturing should sustain the demand for industrial parks and standard factory buildings (SFBs) in the country, particularly in the Cavite-Laguna-Batangas corridor, the country’s primary industrial hub,” Colliers said.

Real estate consulting firm Pinnacle in December last year, meanwhile, described Metro Cebu’s industrial market as “very healthy.”

“In fact, the industrial zones in Metro Cebu were filled up more than four years ago, well ahead of their counterparts in Luzon,” Pinnacle said in its market visa titled “Maturing Cebu Market.”

At present, Metro Cebu has 27 IT parks and centers, seven manufacturing zones, two tourism economic zones and one agro-industrial economic zone.

The total area of economic zones in Metro Cebu is estimated at 120 hectares with only less than three hectares of industrial space available for lease, or an estimated occupancy rate of 97.5 percent.

There are also manufacturers located outside of these economic zones as well.

Pinnacle said that since there are limited available industrial spaces in Metro Cebu, a total area of 50 hectares is planned for a light industrial park in the ongoing reclamation in Minglanilla.

Boom for export sector

The local export sector is also taking advantage of the weakening peso as this was seen to make export prices more competitive.

Federico Escalona, executive director at the Philippine Exporters Confederation (Philexport) Cebu chapter, said they expect sales to pick up in the coming months due to this development.

Although export growth had been sluggish in the past year, the trend was positive at least in the first semester of 2017.

“Thus, a weak peso will still make Philippine products competitive,” he said.

With this in mind, he said the sector will try to expand its share in existing markets as well as develop new markets and products through innovation.

Escalona said innovations can be incremental or radical, it can be product innovation or process innovation or in blue ocean terms, value innovation for buyers’ satisfaction.