SM Prime Holdings, Inc. is looking to take its model at the Mall of Asia (MOA) complex, a cluster of buildings that has been attracting locators from the technology and outsourcing industries, to Cebu City.
 
 
FIVE E-COM Center (front) and Two E-Com Center (rear right) are depicted in this digital rendering. –Santaelenaconstruction.com
 
David L. Rafael, SM Prime senior vice-president, said the company’s strategy for SM Seaside City in the most urbanized area in the Visayas is similar to that of its mixed-use property facing the Manila Bay.

“It’s really just a matter of timing… That has been our formula. The mall became operational; it became a success; it started generating a lot interest and a lot of customer traffic. Once we see that happening… that would be the right time to open the office component,” he said, on the sidelines of a new building’s launch in the MOA e-commerce complex in Pasay City.

Five E-Com Center is the third building in the cluster. The first two opened in 2008 and 2012. The new 15-level building has a gross floor area of 126,907 square meters (sq.m.) and a leasable area of around 88,000 sq.m. It now has 95% occupancy, with locators such as Tupperware, Klaveness, Xerox, Telstra, Teletech and Vestas.

In Cebu City, Mr. Rafael said, the masterplan for the 30-hectare SM Seaside City has 10-15 hectares devoted to commercial development, for projects like the e-commerce complex. The new mall, SM Prime’s fourth largest in the country, is set to open by the end of this month or early in December, he said.

The SM Prime official also said that a year after the mall’s opening, it should have generated “the traction and the interest” — “then the other components start to come in.”

Mr. Rafael, who heads SM Prime’s commercial property segment, described the demand for office spaces as “very strong”, mostly from the business process outsourcing (BPO) industry. The case is the same in Cebu.

“Most of these BPO companies are looking for redundant areas, just in case a disaster happens in Metro Manila. They need a location far from Manila that can be their backup. And a lot of these outsourcing companies choose Cebu,” he said, pointing to the city’s large talent pool, universities that offer a steady supply of recruits, and modern infrastructure.

Aside from the BPO and technology-based industries, he said, shipping and logistics add to the growing interest in new office spaces.

“Cebu is a big port city. I’m sure a lot of these logistics companies are located in old business districts that have not been well-maintained. 

So, we’re going to see that same flight to quality,” he said.

Alexander D. Pomento, SM Prime vice-president for investor relations, said the combined office and commercial space segment contributes around 5% to SM Prime’s total revenues. It accounts for around the same share of the capital expenditure.

“The concentration now of building new offices is in this area [Mall of Asia] because we want to build more traffic,” he said, adding that a bigger volume of locators enhances the value and the business activity in the mall.

The new building, Five E-com Center, although the third one completed in the e-commerce complex has a predesignated name that comes after the others in the sequence.

“The locators want this area, so Five E-com came first in terms of construction before the third and fourth E-com. The third is under construction. The fourth and sixth in terms of land location were already allocated, but we haven’t constructed anything on them yet,” he said.

He said the combined floor area of the occupied buildings is roughly 350,000 sq.m., for a total of 600,000 sq.m. once all six buildings are completed.

“As long as the BPO industry’s projection will be sustained in terms of their outlook and the government studies, I think demand for office space will remain strong for the next few years,” he said.

The company cited estimated forecast revenues of $25 billion for local technology-based and BPO industries, translating to the direct employment of 1.3 million Filipinos and indirectly creating jobs of 3.2 million in 2016.

SM Prime, the property arm of Henry Sy’s group of companies, derived nearly half of its P23.3-billion income during the January-September period from its mall operations. The other segments — residential, commercial, and the combined hotels and convention centers — accounted for the rest.