By Beatriz Marie D. Cruz, Reporter
METRO MANILA’S office emptiness rate will remain high through 2027 as latest supply continues to outpace demand, in line with real estate consultancy KMC Savills, Inc.
“The capital’s office market will remain under pressure from high vacancies and structural oversupply through 2027, keeping rental growth subdued,” KMC Savills said in a third-quarter report.
Emptiness rates are projected to hover around 20% in the following three years, weighed by high inventory in key districts resembling the Bay Area and Alabang Central Business District (CBD).
The emptiness rate stood at 20.6% last quarter, almost unchanged from 20.7% within the second quarter. The slight improvement was offset by the completion of recent buildings in Makati and Taguig, the firm said.
The Alabang CBD recorded the very best emptiness rate at 36.6%, followed by the Bay Area — which incorporates Manila, Pasay and Parañaque — at 35.9%. In contrast, Bonifacio Global City (BGC) continued to post tight occupancy at 8.3%, while Makati CBD, Ortigas Center and Quezon City had modest declines in vacant space.
“This sustained high emptiness suggests a structural mismatch between available supply and current tenant demand, which is further impacted by client nonrenewal,” KMC Savills said.
Amongst business districts, BGC stays the largest with 2.26 million square meters (sq.m.) of office stock, followed by Makati CBD (1.75 million sq.m.), Ortigas Center (1.33 million sq.m.), Bay Area (1.25 million sq.m.), Quezon City (907,000 sq.m.) and Alabang (667,000 sq.m.).
Net office take-up dropped 15.65% yr on yr to 37,800 sq.m. within the third quarter, and fell 32.35% from the previous quarter’s 55,879 sq.m. Leasing activity was concentrated in BGC and Ortigas Center.
Recent supply is predicted to rise sharply next yr after a quiet yr for completion. Only 10% of the 338,000 sq.m. expected latest supply for 2024 was delivered as of the third quarter.
While demand from information technology-business process management (IT-BPM) firms and traditional tenants stays regular, KMC Savills said it will not be enough to soak up the upcoming inventory.
“The incoming supply pipeline, coupled with the lingering impact of vacant spaces, signifies that demand absorption is currently insufficient to significantly reduce the general emptiness rate within the short to medium term,” it said.
From 2025 to 2030, Quezon City is predicted to account for the largest share of upcoming office space with 220,000 sq.m., followed by the Bay Area (204,000 sq.m.), BGC (146,000 sq.m.) and Makati (103,000 sq.m.).
Landlords are expected to roll out aggressive incentives and concession packages to draw tenants amid the glut.
Average monthly prime office rents declined 1.7% quarter on quarter to P833.4 per sq.m. within the third quarter, dragged by softening rates in Makati and BGC.
Rental declines are expected to bottom out near P800 per sq.m. monthly by end-2026 as landlords in top-grade buildings grow to be less flexible on pricing, KMC Savills said.