The Philippine commercial real estate market is showing resilience in prime sectors despite challenges in fringe areas, according to the second-quarter report by Cushman & Wakefield.
The report, titled “Philippine Office and Investment MarketBeat,” noted that prime and Grade A offices in central business districts like Makati, BGC and Ortigas experienced stable demand.
Rental rates in these areas saw a 0.5-percent increase to P1,118 pesos per square meter per month, while the vacancy rate improved to 10.5 percent.
Office spaces in fringe central business districts declined 1.8 percent in terms of rates and faced higher vacancy of 23.4 percent, which the report attributed to oversupply and subdued demand.
“The resilience of Metro Manila’s office market, particularly in the established central business districts, underlines the enduring demand for high-quality and strategically located properties,” said Claro Cordero Jr., director and head of research, consulting and advisory services at Cushman & Wakefield.
“Meanwhile, fringe areas will require more innovative approaches to address persistent challenges,” he said in the report.
Overall, rental yields for office assets remained steady at 6.93 percent, supported by investor confidence in Grade A developments.
The Philippine economy grew by 5.5 percent year-on-year in the second quarter of 2025. This growth was driven by strong performances in the services and agriculture sectors.
Easing inflation, which fell to 1.37 percent in the second quarter and further to 0.9 percent in July, also contributed to a 5.5-percent increase in household consumption.
Other real estate sectors also showed growth. The residential market is being driven by urban professionals and mid-market buyers.
Retail benefits from stable consumer spending, with malls adopting new experiential formats. Tourism recovery is boosting the hospitality sector, and the industrial sector remains robust due to e-commerce expansion and the need for logistics and cold storage facilities.
Cordero said the market reflects the country’s economic momentum, with each sector adapting to the needs of end-users.
Investor confidence has been buoyed by the Bangko Sentral ng Pilipinas’ 25-basis-point policy rate cut and inflation forecast of 1.6 percent for 2025.
Regional hubs like Cebu, Clark and Davao are also gaining traction, with investors increasingly looking to these secondary markets for diversification.
