THE PHILIPPINE office market began 2026 with stronger net demand, as net absorption rose 77% yr on yr to 133,000 square meters (sq.m.) in the primary quarter (Q1), property consultancy firm Leechiu Property Consultants (LPC) said.
Gross demand, nevertheless, reached 234,000 sq.m., down 22% from the previous quarter, which LPC said was “consistent with typical first-quarter seasonal patterns.”
LPC Director of Industrial Leasing Mikko Barranda said market conditions remain stable but have gotten more complex.
“At this point, the market stays on target, however the path forward is becoming less straightforward,” he said during a briefing on Tuesday.
He added that “tenants have gotten more discerning and intentional of their real estate decisions, which have to be matched by greater flexibility from the market.”
Traditional occupiers drove demand, accounting for 143,000 sq.m., or 61% of total take-up. Information technology and business process management (IT-BPM) firms contributed 79,000 sq.m., or 34%.
Expansion deals dominated each segments, with 112,000 sq.m. recorded for traditional tenants and 51,000 sq.m. for IT-BPM firms.
Demand for managed facilities rose to 31,000 sq.m. as occupiers sought “ready-to-use spaces,” LPC said.
The rise in net demand was partly driven by a 62% year-on-year decline in vacated space to 101,000 sq.m. for the quarter.
LPC attributed the development mainly to the “absence of Philippine offshore gaming operator (POGO)-related exits.”
The firm said occupiers have “largely accomplished right-sizing and aren’t any longer giving up additional space.”
In Metro Manila, Makati City led office transactions with 76,800 sq.m., comparable to 54% of its total demand in 2025.
LPC said 63% of those transactions were positioned along Ayala Avenue, with 70% involving semi-fitted or fitted units.
“Makati stays attractive as occupiers reap the benefits of competitive rents and fitted spaces, while maintaining the prestige of an Ayala Avenue address,” the firm said.
Bonifacio Global City (BGC) maintained the bottom emptiness rate at 8%, compared with the Metro Manila average of 18%.
Outside Metro Manila, demand reached 34,000 sq.m., led by Cebu with 11,700 sq.m., followed by Iloilo with 11,000 sq.m. and Clark with 6,600 sq.m.
LPC said provincial demand stays concentrated in “established IT-BPM hubs and infrastructure-linked corridors.”
Total office stock reached 2.7 million sq.m. in Metro Manila and 723,000 sq.m. within the provinces.
Metro Manila is anticipated so as to add 807,000 sq.m. of recent office supply through 2028, with Quezon City accounting for 240,000 sq.m.
The lively leasing pipeline stood at 227,000 sq.m., split between IT-BPM firms at 114,000 sq.m. and traditional occupiers at 113,000 sq.m.
Mr. Barranda said the fundamental risk lies in whether these requirements will translate into accomplished deals.
He questioned “whether these requirements can translate into actual transactions amid current uncertainties,” including the energy situation and geopolitical tensions.
Throughout the IT-BPM pipeline, third-party outsourcers accounted for 61%, while Global Capability Centers (GCCs) made up 39%.
Despite these risks, LPC said “five-year lease terms remain dominant at 71% of the pipeline sample, reflecting continued occupier commitment to physical office space despite evolving workplace strategies.” — Alexandria Grace C. Magno