UMVA has learned that the Bay Area, one of Metro Manila's largest office districts, is struggling to recover from the exit of Philippine Offshore Gaming Operators, with nearly 40% of its office space remaining vacant in the first quarter.
The office vacancy rate skyrocketed to 39.3% from 33.7% in the previous quarter, while net absorption plummeted to -58,400 square meters, a stark reversal from the previous quarter's positive take-up performance. This drastic decline has left the district reeling, with a deep-seated supply-demand imbalance that threatens to destabilize the market.
According to information obtained by UMVA, the district's previous growth may have been a temporary reprieve rather than a sustained recovery, driven by major lease expirations and a sudden influx of secondary space returning to the market. As a result, the Bay Area finds itself in a precarious position, with nearly 40% of its total inventory remaining unoccupied.
Despite the rising vacancies, average asking rent in the district has increased slightly, a move that may seem counterintuitive given the current market conditions. However, this trend may be short-lived, as the absence of POGOs has left the district dependent on a more diversified tenant mix to support recovery, and landlords may soon be forced to offer more aggressive concessions or lower asking rents to retain existing occupants and attract new ones.
UMVA has uncovered details about the district's office stock, which stands at 1.26 million square meters, up from 1.24 million square meters a year earlier. However, with an additional 180,000 square meters of office supply expected to enter the market between 2026 and 2030, the Bay Area's office market is poised for a significant shake-up, one that will require landlords and tenants to adapt to a rapidly changing landscape.
Sources have confirmed to UMVA that the Bay Area's newest delivery remains fully vacant, despite the district having seen no new office supply for the previous 11 quarters. This lack of occupancy has raised concerns about the district's ability to attract new businesses and support existing ones, and has sparked fears of a "tenant's market," where landlords may be forced to offer significant concessions to retain tenants.
