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A broader look at today’s business Sunday, February 9, 2025 Vol. 20 No. 120
P25.00 nationwide | 2 sections 12 pages | 7 DAYS A WEEK
GROWTH AREAS, TRENDS DRIVE DEVELOPERS’ PLANS n
Non-NCR-centric, attuned to global and local trends, developers excitedly follow the tracks of an awakening industrial sector.
ABOVE the bustling industrial landscape of Sto. Tomas, Batangas, Mount Makiling looms like a sleeping giant. The tranquil mountain mirrors the Philippine industrial sector, which, after years of slumber, is on the cusp of a significant awakening. With a booming demand for Grade A industrial spaces, the region is primed for growth in 2025, as developers, including giants like Aboitiz and Ayala, push forward with transformative projects. MICHAEL EDWARDS VIA DREAMSTIME.COM
By John Eiron R. Francisco
W
HILE some people are losing sleep over a glut in condominium units, the Philippine industrial sector, once considered a “sleeping giant,” is now on the cusp of a major awakening in 2025, signalling a boon to developers, according to a real estate experts. PRIME Philippines Founder and CEO Jettson Yu said at a property market briefing this week that the industry has undergone a transformation, with developers adapting to higher interest rates and making strategic moves in the market. He described 2024 as a period of “recalibration” for many developers that allows them to adjust to financial conditions and position themselves for growth. This recalibration has already yielded positive results, with the sector maintaining an impressive 90-percent occupancy rate for the third consecutive year and closing 2024 with a remarkable 97 percent occupancy, Yu said. “This is the year the giant is about to awaken,” Yu said, empha-
sizing the growing momentum in the industrial sector. In 2024, the Philippines’s total warehouse supply grew by 4 percent in 2024, reaching 37.6 million square meters. Key areas such as Laguna, Batangas, and Cebu saw significant supply increases, with Batangas—home to new developments from companies like Aboitiz and Ayala—experiencing the lowest occupancy rate due to an influx of new industrial parks.
No longer NCR-centric
YU also pointed out a shift in locators’ preferences, as vacancy rates in Metro Manila and its surrounding areas slightly increased. The demand for Grade A facilities has surged, driven by companies seek-
ON THE INDUSTRIAL SECTOR’S AWAKENING IN 2025: “This is the year the giant is about to awaken.”—Jettson Yu (PRIME Philippines Founder and CEO)
ing operational efficiency. Many companies have relocated from Grade C warehouses, with one major retailer moving from Metro Manila to Calabarzon in 2024 to access Grade A spaces. The demand for Grade A warehouses continues to rise, as these facilities offer key features like loading bays and are more sustainable and efficient. Yu noted that companies are increasingly opting for such spaces, with DHL recently opening a new warehouse in Santa Rosa, Laguna, and DSV expanding to Silang, Cavite. The trend toward high-quality facilities has also contributed to a 6.19-percent increase in average rental rates for industrial spaces that reflects the ongoing demand for Grade A properties.
ON THE GROWTH IN DEMAND FOR VARIOUS RETAIL SPACES: “We continue to see strong demand for commercial spaces, particularly for drive-thru stores, standalone outlets, and leasable lots.”—Sondi Tuazon (PRIME Philippines retail team)
ON THE GOVERNMENT’S TAX REFORM INITIATIVES TO BOOST COMPETITIVENESS: “A 2-percent flat local tax will simplify the previously fragmented tax system for businesses.”— Domini Velasquez (Department of Finance Undersecretary)
Industrial space demand
This shift, Yu explained, was facilitated by the decentralization programs of the past three administrations, which prioritized infrastructure development and connectivity between key cities and provinces. This, in turn, has fueled new real-estate developments and townships in these areas. Strategic positioning has become increasingly important for logistics companies. With the Philippines’s archipelagic nature— home to over 7,000 islands—Yu emphasized the need for companies to strategically place their hubs, from main facilities to lastmile hubs, to efficiently serve their markets. Beyond logistics, manufacturing is another key driver behind
YU projected that the demand for industrial spaces in the country will surge over the next decade. By 2035, an additional 50 million square meters of industrial space will be needed, with current growth being just the beginning. “The 50 million projection is from a conservative to optimistic view,” he said. He attributed much of this movement to the logistics sector, which has been expanding over the past three to four years. The pandemic accelerated decentralization, prompting many people to relocate from Metro Manila to provincial hubs like Cebu and Davao, where remote and permanent job opportunities have emerged.
ON THE BSP’S ROLE IN ECONOMIC STABILITY: “At the BSP, we are focused on ensuring a stable macroeconomic environment, particularly through stable inflation, which provides a more predictable environment for business planners.”— Zeno Ronald Abenoja, Assistant Governor for the Monetary Policy Subsector at the Bangko Sentral ng Pilipinas
the demand for industrial space. Yu noted that the Philippines missed a major opportunity during the “China Plus One” trend in 2020 and 2021, when companies sought to diversify their operations beyond China. “Out of 10 companies that expanded manufacturing outside China, only one or two chose the Philippines,” Yu said. The majority opted for Vietnam, Malaysia, and Indonesia, with Vietnam capturing six out of ten of these businesses.
Growth drivers
HOWEVER, Yu is optimistic about the future. “In the next 10 years, Continued on A2
PESO EXCHANGE RATES n US 58.0520 n JAPAN 0.3833 n UK 72.1993 n HK 7.4557 n CHINA 7.9700 n SINGAPORE 42.9855 n AUSTRALIA 36.4741 n EU 60.2870 n KOREA 0.0402 n SAUDI ARABIA 15.4826 Source: BSP (February 7, 2025)