The office market in manila, Phillipines has been facing supply challenges as it has been experiencing high vacancy rates.
Colliers estimates about 2.6 million sqm of vacant office space in Metro Manila as of end-2024 which will take the market about five years to fully absorb.
It added that Metro Manila office vacancy is expected to have reached 20.5 percent as of end-2024, the highest ever recorded in the capital region.
“This increase in vacancy is understandable given the exodus of POGOs as well as non-renewal of companies that started their five-year leases in 2019,”Colliers Philippines director for research Joey Roi Bondoc said.
Despite the large amount of vacant office spaces, property experts stress that there is also no possibility of a commercial real estate
bubble in the office market.
“The possibility of a commercial real estate bubble forming in the office market is unlikely,”Santos Knight Frank Director of Consultancy Lovelle Taleon said.
“While the POGO exodus has contributed to increased vacancy rates, as highlighted in our 2025 outlook report, the impact is partial and does not indicate the formation of a bubble,” she added.
Landlords implementing measures
Taleon emphasized that landlords are proactively adapting to these challenges by reimagining vacant office spaces that foster collaboration and a sense of community.
Similar to the residential market, Bondo noted that developers are trying to ward off concerns by limiting new office launches, especially in Metro Manila.
He added that landlords are offering fit-out allowances, lowering lease rates, and limiting new project launches to address existing concerns about oversupply.
Demand coming in from other sectors
Bondoc emphasized that outside of POGOs, developers are banking on other sources of growth, including new foreign firms setting up shop in the Philippines, Filipino MSMEs, as well as government agencies taking advantage of high-quality office spaces being offered at much lower rates.
He added that some business process outsourcing (BPO) firms also continue to expand and occupy office space amid the implementation of flexible workspace arrangements.
“Some BPOs are still on a wait-and-see, especially after Trump’s election, but we expect these firms to finalize their plans over the next six to 12 months. Office landlords should be on the lookout for their office space requirements,” Bondoc said.
The Colliers official added that take up for flexible office space has also been improving given the implementation of hybrid work arrangements. He emphasized that is one office sub-segment that has seen sustained growth post-COVID-19.
Source: Phistar
