Property consultant Prime Philippine said demand for industrial space in the next 10 years is expected to hit 50 million square meters (sq.m).
Jet Yu, Prime Philippines chief executive officer (CEO), said in a recent interview demand is driven primarily by the requirements of the logistics business amid the diaspora that the recent COVID-19 pandemic triggered; the shift of manufacturers away from a China-centered hub; and the need for data centers.
Yu said the 50-million sq.m. projection reflects a conservative to optimistic outlook.
A major factor driving this demand is the logistics sector, which has been expanding steadily over the past three to four years, the official said.
Yu explained this shift was made possible by the decentralization initiatives of the past three administrations, which focused on enhancing infrastructure and connectivity between major cities and provinces.
These efforts have, in turn, spurred new real estate developments and townships in these regions, according to Yu.
Yu said the pandemic played a crucial role in accelerating decentralization, leading many individuals to relocate from Metro Manila to provincial hubs like Cebu and Davao, where new remote and permanent job opportunities have emerged.
“Post-pandemic, there has been a fast track of decentralization across the Philippines. Many went back to the provinces because of the pandemic and found jobs there,” he said.
As the logistics industry grows, strategic positioning has become more critical for companies, Prime Philippines said.
“These logistics players over the last three years have been strategically positioning themselves. And being a country with over 7,000 islands, it’s very important for them to be located where their market is,” said Yu.
He said this necessitates locating hubs, from primary facilities to last-mile hubs, in key locations to effectively serve the market.
Yu said in addition to logistics, the manufacturing sector is also driving increased demand for industrial space.
Yu pointed out that the Philippines missed a significant opportunity during the “China Plus One” trend in 2020 and 2021, when companies sought alternatives to China for their operations.
“Many companies from China wanted to diversify their operations to other Asean countries,” Yu said, adding that out of 10 companies that expanded manufacturing outside of China, only one or two selected the Philippines. The majority chose Vietnam, Malaysia, and Indonesia, with Vietnam capturing six out of 10 of these businesses.
Yu said the Philippines will see a surge in demand for data center in the next 10 years given the wide adoption artificial intelligence (AI).
“There’s a need for more and more data centers. Currently, the United States has over 6,000 data centers in their country. Australia has about 2,000. The Philippines has about 30 data centers. So imagine the demand for that. A typical data center would usually require a sweet spot of about 1.5 to 3 hectare. So on top of the logistics that we’re seeing now, manufacturing, next is the data center,” Yu said.
Yu said the industrial sector is poised to be a major backbone of the economy by 2035.
