By David Leechiu
WHEN I started in real estate about 28 years ago, the battle cry then was “Location, location, location.”
Metro Manila was the hub of commercial activity, and the business districts that generated a significant commercial interest were the Makati and Ortigas central business districts (CBDs). At that time the primary locators were what we now consider as traditional tenants.
Workers gravitated to Metro Manila where they had convenient access to higher-paying jobs. Generally, the focus in commercial real estate development was to acquire commercial lots in locations with road access, the nearer to a corner the better for the project. It was more of a passive approach, where it was considered advantageous for office or residential projects to be located near retail areas to add to marketability.
However, in the mid-1990s, more real estate developers started to adopt an active masterplanning approach for projects with larger land areas in greenfield locations. They conceptualized integrated townships that were intended to create communities whose stakeholders were attracted to the live, work, play, pray concept where all their needs are within a short walk away and all within the district. More importantly, these townships have carefully planned pedestrian and vehicular infrastructure strategically located near transport hubs or infrastructure developments.
This wasn’t a new idea, though; it just wasn’t a prevalent approach. Makati CBD and Ortigas CBD were already established large-scale townships at the time. But even then, it was evident that transit-oriented township development was the future direction of real estate.
I was fortunate to see the birth of Bonifacio Global City (BGC), from when it was still being conceptualized to the execution of the masterplan. The designers of BGC envisioned carefully arranged development zoning for BGC, anticipating the types of land use complementing each other.
Even then, they already envisioned transport and people mover systems like a monorail and a bus system transporting workers, employees, residents, and visitors both within the district and into transport stations outside. Connectivity to roads and rails, with a multimodal station to transfer from the different transport types was already contemplated then.
As part of a pedestrian-first approach to infrastructure, underground utilities, wide sidewalks and covered arcade walks or cantilevered building covers were included in the design guidelines of the future buildings. While not all plans envisioned for BGC materialized, I’m happy that BGC has now claimed the spot as the premier business district of the country and a township in its own right.
I am a believer in township projects. If we do a comparative study of land and capital values of properties within townships versus those in the fringes or outside of these townships, the premium buyers and developers attach to townships becomes quickly apparent. The integrated development as well as the connectivity townships to other areas creates an ideal working ecosystem, where locators can live, socialize, create experiences, study, worship, shop, and work.
In Metro Manila alone, there are approximately 45 townships scattered in the 17 cities that comprise the National Capital Region ranging in size from one hectare to 800 hectares. In the provinces, it is an even bigger trend with around 180 townships.
To maximize property values, developers built vertically, with smaller residential units for sale and larger commercial spaces for lease. I remember when condominium units started shrinking in size. Some units were almost only big enough for a bed. These developments did provide retail floors where residents can dine, unwind, and entertain. Amenity areas did increase in size as shared living spaces.
BPO BOOMRising land costs and limited availability of large plots of land also convinced developers to build township projects outside Metro Manila. These developments became possible because of the growth of business process outsourcing (BPO) companies.
The need for Grade B office spaces for these typically call center or voice company tenants, and the corresponding residential demand created made it possible for such townships and even mini cities to grow.
As these townships started to be developed, this created an opportunity for the growing number of BPO companies to expand operations outside the National Capital Region.
Provincial locations offered cost savings for BPO companies from lower salary levels resulted in reduced operational costs. Some Manila-based employees found it attractive to return to their hometowns due to the lower cost of living. Provincial sites also enabled the BPOs to widen sources of talent or qualified employees.
When BPO firms came to the Philippines, their site selection was anchored on strategically located properties that had access to a large talent pool, sufficient support facilities for their operations and their employees. In the past, these office spaces were normally only found in Metro Manila, and only in the core CBDs.
With the newer townships, support facilities for operations came in the form of BPO-ready developments, with redundant connectivity and standard fit-outs. Support for employees came in the form of retail establishments for food, drink, and recreation, as well as nearby residential developments for employees who want to minimize transportation costs, reduce travel delay risks and ensure security (as most BPOs operate 24/7).
And thus, township developments became highly attractive options for these locators since they checked all the boxes, and then some. Traditional locators also found the characteristics of townships convenient. After all, businesses would want to have operations where everything is within walking distance; it would motivate their employees to stay with them for the long haul.
IMPACT OF PANDEMICWhen the coronavirus disease 2019 (COVID-19) pandemic hit and the country underwent the world’s longest lockdown period, people were limited to the claustrophobic confines of their homes for extended periods.
This meant taking school classes, doing office work, shopping — all online. This was extra challenging given that Filipinos commonly live with extended families under one roof. For those who lived in condominiums, units were usually space-efficient (read: small), so occupants felt restricted in such a small space with no open area. Residents felt the need for more space, more breathing room, more areas to recharge within the home.
When the lockdown was lifted, we saw the trend of potential home buyers moving out of the cities towards low-density developments within townships. The preferred choice was low-density residential subdivisions and homes outside of Metro Manila. Growth of townships offering these residential types accelerated. More pronounced were projects near transport hubs or major highways that let employees get to their offices with ease.
FUTURE OF TOWNSHIPSWhat I foresee for townships in the future are the increased importance and prevalence of more transit-oriented developments. These townships will have the added advantage of high accessibility linking to an urban network of roads and rails to nodes of activity or other townships and major city centers like CBDs.
Transit-oriented townships sell the convenience, comfort, and lifestyle in a zone that is accessible to other cities or districts through major highways. These provide high mobility to future residents allowing them to traverse the connected network. These will also have the added benefit of decentralization, helping alleviate the heavy traffic and high daytime population the central business districts experience due to the daily commute of employees.
Today, a township project is a destination in and of itself where utilities are carefully laid out, locators can have access to jobs, homes, entertainment and shopping options, schools, places of worship, and guest accommodations, possibly closer to their hometown with lower cost of living.
Add to that the connection to the urban network, transit-oriented townships are strategically positioned to spread out commercial activity to multiple nodes and decongest historically highly populated areas. For instance, in 2000, 9.8 million or 13% of the population was in Metro Manila.
In Cavite-Laguna-Batangas (CALABA) — among the first areas that benefited from the spillover demand from Metro Manila — there were about five township developments 23 years ago, and their population was at 5.3 million. This year, there are approximately 35 township developments available in CALABA and the projected population is 11.75 million, 10.29% of the total population.
Meanwhile, the population in Metro Manila is projected at 14.2 million or 12.4% of total population in 2023. Transit-oriented township development seems to be effective in decentralizing development by providing opportunities outside Metro Manila.
Transit-oriented township development is a forward-looking strategy. It provides synergy through integrated living. It also spreads out economic growth by creating connected nodes of commercial activity.
The Philippines has experienced development at a rapid pace over the last 25 years. Today, the country is likely one of the fastest-growing economies in Asia. And while the remittances of the overseas Filipino workers (OFWs) have been consistently growing and is now at $32 billion, the income from the BPO sector has already surpassed the OFW remittances and is expected to hit $35.9 billion this year.
The value of real estate is not just in the physical development, but also in the relationships, experience, lifestyle, and connectivity that locators get to access in the community. We are lucky to have witnessed the rapid changes that brought development focus from just brick-and-mortar occupancy to include the overall experience and connections over such a short time.
Who knows, the next 10 years may bring even more changes that further expand the dimensions of real estate development. It may involve net zero impact or positive impact on a large-scale development strategy that looks to give a better world, not just in terms of technology but in working with nature so our resources are renewed and preserved for future generations.
David Leechiu is the president and chief executive officer of Leechiu Property Consultants, Inc. (LPC). LPC is a premier real estate advisory firm that commits to deliver strategic real estate solutions to its clients and partners through its expertise in tenant and landlord representation, investment sales, general brokerage, research and consultancy, and property valuation.