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Rosario "Cha" Carbonell, KMC MAG Group Associate Director presented this document in the recently concluded Business Startups Expo (Office Expo) in Megatrade Hall 1 last May 9 to 10, 2014. She discussed the factors that should be considered when leasing or renting an office space in the Philippines: occupier attributes, building specifications, lease information, and lease terms. She also included info on the current rental rates and yields in Metro Manila's top 3 CBDs as well as regarding lease contracts and tenant/landlord requirements and rights.
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Office Expo 2014
May 2014
How to Choose the Right Office Space
Occupier Attributes
Nature of Business
Head office
Sales office
Financial institutions
Brokerage firms
Law firms
Advertising firms
Insurance companies
Corporate Office
Customer support
Technical support
Telemarketing
Employee IT help-desk
Insurance processing
Data entry/processing
Data conversion
Book keeping/ Accounting
Online/ web research
Business Process Outsourcing
IT
HR
Finance
Facilities
Sales
Logistics
Shared Services
Location
Prime
Low-cost Areas
Central Business Districts
Next Wave/ Provincial
sites
Location
Branding and Image
Labor Pool
Accessibility
Support Services
Area for Expansion
Summary
Office Type Corporate Office Shared Services BPO
Location Prime CBD Next wave/Low cost area
Image/Branding High priority Mid priority Low priority
Labor Pool Any Fresh graduates Experienced
Accessibility Office hours 24/7 24/7
Support Services Office hours 24/7 24/7
Area for Expansion Low priority High priority High priority
Building Specifications
Qualitative Aspect
PEZA-Accreditation
Number of floors
Floor plate
Floor Efficiency
Floor Efficiency Computation
Gross Leasable Area = 2000 square meters
Net Usable Area = 1500 square meters
Floor Efficiency = (Net Usable / Gross Leasable) x 100
(1500/2000) x 100 = 75%
Density Allocation
AC System
Operating Hours
Telco Provider
Floor loading
Number of Elevators
Backup Power
Parking space
Amenities
Riser Space
Summary
Office Type Corporate Office Shared Services BPO
PEZA No Yes Yes
No. of Floors High-rise Low to Mid-rise Low to Mid rise
Floor Plate 500-1,000sq m 1,500-2,000sq m 1,000-2,000sq m
Floor Efficiency High High High
Density Allocation 10-15sq m / pax 6-10sq m/ pax 6sq m/ pax
Operating Hours Normal office hours
24/7 24/7
Office Type Corporate Office Shared Services BPO
Telco Provider At least 2 2-3 providers 2-3 providers
Floor Loading 60psf 80-100psf 80-100psf
Number of Elevators
2-3 elevators per floor
2 elevators per floor 2 elevators per floor
Back-up Power 100% N+1 (100%+) N+1 (100%+)
Parking 1 for every 70 -100 sqm leased
1 for every 1000 sqm leased
1 for every 500 sqm leased
Amenities Normal office hours
24/7 24/7
Summary
Lease Information Quantitative Aspect
Rental Rate
CUSA/Association dues
AC charges
After office extension charges
Deposits
Construction costs based on hand-over
condition
Lease Term
Lease Information
Rental Rates (Key Office Figures)
Grade
Average Net
Rental Level
YoY Change
Upper Net Rental Level
Vacancy Rate Q4/2013
Prime Yield Spread
Makati Premium 1065.60
8.5%
1300.00
5.6%
8.2%-9.2%
Grade A 759.40 950.00
BGC Grade A 735.30 4.8% 950.00
2.9% 6.2%-7.2%
Ortigas Grade 571.50 7.0% 750.00 2.5% 6.8%-7.8%
Traditional Office Space - at least 3 years
Serviced Office Space - at least 6 months
Virtual Office Space
Shared Office Space
Lease Terms
Lease Terms and Conditions
Company is allowed to pre-
terminated the lease prior to its
expiration
Guaranteed lease 36th month
Forfeiture of Security Deposit
Not necessary to pay the remaining
months of the lease term
Pre-termination Rights
Ideal for big floor
takers with expansion
plans
Certain level of
guarantee but no
commitment
Tenant priority
Right of First Refusal
Protection on possible down-sizing
Flexibility to incubate a sister
company or company resulting to
a merger
Assign lease of companies due to
a merger
Sublease and Assignment Clause
Warm-shell: Smooth
cement flooring, AC
units, fire sprinklers,
smoke detectors, t-
runners, acoustic boards
Bare-shell: Rough
cement, open ceiling
Handover Condition
Secure rates, terms, and
conditions on current
market
More flexibility on building
design
Build-to-suit arrangements
Pre-lease Arrangements
Cap on renewal rates
Lower hold-over
penalties
Renewal Clause
Incorporated in 2009
Headquarters: Sun Life Centre, Bonifacio
Global City
Branch Office: Rufino Pacific Tower,
Makati
Has a pipeline of over 1 million square
feet
1.5 Billion (Php) in Capital Markets
transactions in 2013
About KMC MAG Group
KMC MAG Group key facts
Over 100 competitive staff employed
Strong Media Exposure
600,000+ square feet of commercial &
residential properties which were leased and sold for 2013
300+ companies assisted
in the last few years in their business set up in the Philippines
Recognized globally. #1 Best in Real Estate Agency awarded by International Property Awards
KMC MAG Group is an international Associate of Savills
Savills is a leading international real estate services group listed
on the London Stock Exchange
Savills has approximately 25,000 employees and 500 offices
worldwide
The services of Savills include residential, office, industrial, retail,
leisure, healthcare, hotel and mixed use development schemes
International Network
PHILIPPINES Manila
Service lines overview
Valuation
Investments
Consulting & Research
Tenant Representation
Asset Management
Property Management
Facilities Management
Residential Services
Hotels and Leisure
Project Marketing Project Management
Research & Development
Construction Operation
Serviced Offices
Offshore Corporate Services
Rosario “Cha” Carbonell Associate Director [email protected]
Thank You!
(+63 2) 403-5519 [email protected] kmcmaggroup.com
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