Philippine office landlords are expected to confront a tougher second half of the year as demand slows and a growing number of aging buildings enter the market.
Commercial real estate analysts estimate that the office sector will require more than 500,000 square meters of new occupancy to match last year’s take‑up. They warn that the current environment demands careful preparation.
Vacant spaces account for over half of the market, and many of those properties are nearing or exceeding a decade of age. This combination of high vacancy and older infrastructure is forcing developers to rethink competitiveness.
Leasing gaps could extend from one to four years, meaning landlords who lose tenants may struggle to secure replacements for extended periods.
In contrast, the industrial and logistics segment has delivered strong performance in the first half and is projected to maintain that momentum throughout the remainder of the year.
Developers seeking better yields are increasingly drawn to industrial projects, citing the sector’s resilience and higher return potential compared to other asset classes.
Retail opportunities remain viable, particularly in provincial markets where remittances from overseas workers continue to support consumer spending.
Local developers are encouraged to activate idle land holdings outside the capital to capture this structural demand in key urban centers beyond Metro Manila.
Industry leaders are also urging the sector to prepare for the long‑term impact of artificial intelligence on office demand and employment, emphasizing the need to keep the workforce competitive and adaptable.
The overarching question is whether the labor market can fill the 1.7 million square meters of vacant space across the country and meet evolving office space requirements in an AI‑driven economy.
