Metro Manila’s office landscape is showing subtle signs of recovery, with vacancy rates projected to ease to 19.6% by the end of the year. This marks a gradual improvement from recent highs, hinting at a stabilizing market after a period of significant change.
The shift is particularly noticeable in Ortigas Center, which has experienced a consistent decline in vacancies over the last three to four quarters. Experts predict this trend could push Ortigas into single-digit vacancy rates by the latter half of 2026, a remarkable turnaround.
A major factor influencing the overall vacancy rate has been the departure of Philippine Offshore Gaming Operators (POGOs). The Bay Area, once heavily reliant on POGO occupancy, currently holds the highest vacancy rate, but the volume of newly vacated spaces has significantly decreased.
While the Bay Area struggles, Alabang and Quezon City also face high vacancy rates, largely due to recent building completions. However, the overall amount of new, unleased space is beginning to balance with existing vacancies.
Despite a slower fourth quarter, total office space absorption for the year reached approximately 854,600 square meters – the strongest performance in five years. This demonstrates underlying demand despite economic fluctuations.
Interestingly, the traditional dominance of the IT-BPM sector in driving office space demand has waned, falling to 28% of all transactions. This indicates a diversification of industries fueling growth, with smaller average deal sizes.
The majority of transactions, 71%, remain concentrated within Metro Manila, with a strong preference for buildings owned by major developers – representing 68% of all deals. This suggests a flight to quality and established infrastructure.
Beyond the capital, Cebu is emerging as a significant growth hub, with absorption rates doubling from 2024 to 2025. This highlights the increasing importance of provincial cities in the national office market.
Currently, Metro Manila boasts a total office supply of around 1.86 million square meters, split between newly completed and vacated spaces. A substantial portion of the vacated space is concentrated in Makati and Fort Bonifacio, often within buildings developed by smaller firms.
In contrast, Alabang and Quezon City’s available spaces are primarily located in projects spearheaded by major developers, suggesting a different dynamic in those sub-districts. The market is subtly reshaping, driven by evolving industry needs and geographic shifts.
