The Philippine office sector is expected sustain its growth momentum in 2026, supported by improving demand, easing vacancies, and a manageable supply pipeline, according to Leechiu Property Consultants (LPC)
Despite global economic headwinds and evolving workplace strategies, the office market closed 2025 on firmer ground, positioning it for gradual but sustained growth into the new year.
“The industry ability to adapt has been central to its recovery. Occupiers are embracing flexible strategies, consolidations, flight-to-value opportunities and long-term growth planning, while landlords are responding with improved terms, more efficient spaces and investings in sustainability and smart building features,” LPC director for commercial leasing Mikko Barranda said.
Leasing demand up in 2025
LPC reported that year-to-date office leasing demand reached 1.22 million square meters in 2025, a 10 percent increase from 2024 levels and already surpassing full-year demand recorded last year.
The business process outsourcing (BPO) sector accounted for 32 percent, or about 549,000 square meters, while traditional occupiers, including corporates, government offices, and PIGO tenants, made up the remaining 68 percent, or 671,000 square meters.
Expansion deals dominated activity across both segments, signaling business confidence despite lingering uncertainty in global markets.
Bonifacio Global City and Makati continued to anchor demand in Metro Manila, posting the lowest vacancy rates at 9 percent and 15 percent, respectively. Both districts also maintain lean supply pipelines, placing them in a stronger position for faster rental recovery.
Ortigas-Mandaluyong followed closely in terms of leasing activity, while provincial markets remained resilient. Cebu emerged as the leading regional office hub, capturing about 150,000 square meters, or 55 percent of total provincial take-up in 2025.
Vacancies ease as downsizing slows
Vacated office space declined sharply in the fourth quarter of 2025, falling by 59 percent quarter-on-quarter to 85,000 square meters from 205,000 square meters in the previous quarter.
LPC attributed the improvement to reduced downsizing and continued consolidation, particularly among BPO firms. Vacations recorded during the year were largely due to relocations rather than outright contractions, helping stabilize net absorption.
As a result, net take-up for the year improved by 13 percent to 476,000 square meters, reversing weakness seen in 2024.
Supply pipeline remains manageable
Metro Manila’s overall vacancy rate stood at 18 percent as of year-end 2025. Nationwide, the office supply pipeline is estimated at 2.3 million square meters over the next five years, with about 1.9 million square meters expected to come online in Metro Manila from 2026 onwards.
LPC said the controlled pace of new completions, coupled with steady demand, reduces the risk of oversupply and supports a more balanced market environment.
For 2026, LPC expects the office market to maintain a gradual growth trajectory supported by expanding office demand, the continued rise of Global Capability Centers, and renewed leasing activity from traditional occupiers.
Active leasing requirements currently total about 350,000 square meters, with 85,000 square meters already under negotiation, signaling continued momentum entering the new year.
While hybrid work remains a structural consideration, occupiers continue to prioritize high-quality, well-located office buildings as part of long-term workplace strategies.
“While challenges persist, the Philippine office sector has repeatedly proven its resilience and all signs suggest that the momentum will continue in the coming year,” Barranda said.
