Office leasing in the Philippines is showing strong signs of recovery, with the market registering 740,000 square meters (sqm) of demand in the first half of 2025, based on the latest data from Leechiu Property Consultants (LPC).
This figure already represents 67 percent of the 1.1 million square meters recorded for the entire year of 2024, signaling renewed momentum in the sector.
Mikko Barranda, director of commercial leasing at LPC said the growth has been largely driven by the Information Technology and Business Process Management (IT-BPM) industry, which accounted for 365,000 sqm in the first six months of the year.
“Demand has been strong in the first half of the year, and we’re optimistic that this momentum will continue,” said Barranda.
“The IT-BPM industry remains the backbone of the office market, and as such, we are closely tied to its performance. That’s where we’re seeing the demand, so it’s critical that we continue to support and safeguard the industry. We need to ensure it has both stability and longevity—and we’re working alongside industry stakeholders to make that happen.”
LPC said the leasing activity is no longer driven just by tenants relocating to better buildings but by companies expanding their operations.
Bonifacio Global City, for instance, has already surpassed its full-year 2024 take-up, reaching 146,000 sqm in just six months. In the provinces, Cebu continues to lead, accounting for more than half of regional demand.
Despite improving office leasing demand, LPC said
vacancy rates remain high at 18 percent in Metro Manila. This is equivalent to 2.7 million sqm of office space. Vacancy rate in provincial areas is slightly lower 17 percent across 615,000 sqm.
But while vacancy rate remains high, Barranda said contraction activity, or space being vacated, has been tapering off, which suggest that market conditions are stabilizing.
From 312,000 sqm. in the fourth quarter of 2024, exits dropped to 267,000 square meters in the first quarter of 2025 and further to 203,000 sqm. in the second quarter.
“With demand on an upward trajectory and office contractions tapering off, we’re on track to reach our projected net demand target of 490,000 square meters. As of the first half of 2025, we’re already touching 55 percent of that number,” he said.
Tenant behavior is also shifting. Most office take-up this year has been in buildings less than 10 years old, showing a clear preference for newer, more efficient workspaces.
While a majority of deals have been in Grade B buildings, 41 percent were in green-certified developments. LPC said many tenants are now signing long-term leases and investing in building out their own spaces, a contrast from previous years when businesses preferred fully fitted spaces to reduce upfront costs.
Barranda noted that companies are now “willing to invest capital to build space” and are “able to sign leases with the mindset that we will be here for the long haul.”
Looking ahead, LPC is cautiously optimistic about the rest of 2025 amid uncertainties. It said the office sector 5
“The BPO sector is the backbone of the industry, so we will need to protect the industry, which means we are exposed to it, but at the same time, we are seeing the demand,” Barranda said. “We’re on target to reach our projections for the year.”
