THE Philippine office market may decelerate barely, but demand is anticipated to be supported by continued offshoring by global firms, in response to Leechiu Property Consultants (LPC) Chief Executive Officer David Leechiu.
“I feel office will probably decelerate a little bit bit, but it’s going to be the very best performing of the asset class because now greater than ever, corporations are going to offshore to the Philippines much more,” he told reporters on the sidelines of LPC’s first-quarter market briefing on Tuesday.
He said demand may soften alongside broader economic pressures, but offices are expected to stay probably the most resilient asset class at the same time as some firms adopt flexible or hybrid work arrangements.
“They still need the office. Now greater than ever, COVID has taught those that we want the office,” Mr. Leechiu noted.
The country’s office market began 2026 with stronger net demand, as net absorption rose 77% to 133,000 square meters (sq.m.) in the primary quarter.
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.
Mr. Leechiu said property demand is starting to melt as global geopolitical developments push inflation higher and dampen consumer spending.
“I feel we’re feeling it now. Ever since this war began, the inflation numbers are going to be so high,” he said. “It’s going to be higher, and so it’s really hitting the center class and the lower class, which is why this corruption issue must be managed quickly.”
Oil price shocks linked to the Middle East conflict pushed Philippine headline inflation to a 20-month high of 4.1% in March, from 2.4% in February and 1.8% a yr earlier. This exceeded the central bank’s 3.1%-3.9% forecast for the month.
Some property markets are showing early signs of pressure as rising costs and economic uncertainty weigh on demand.
Tourism-driven Palawan could also be among the many hardest hit, as limited flights, high airfares, and elevated logistics costs increase travel and goods expenses.
In Metro Manila, areas with large existing supply resembling the Bay Area, Ortigas, Mandaluyong, and Quezon City may face pressure on account of a mismatch between supply and demand across residential, office, and retail segments.
“Essentially the most balanced market continues to be Makati, Bonifacio, and Alabang,” Mr. Leechiu said.
“I feel Bonifacio Global City (BGC) is the safest market in every asset class, followed by Makati, Cebu, and Iloilo,” he added.
In the primary quarter, Makati City led office transactions in Metro Manila with 76,800 sq.m., akin to 54% of its total demand in 2025. Bonifacio Global City recorded the bottom emptiness rate at 8%, compared with the Metro Manila average of 18%.
Outside Metro Manila, office 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.
Residential demand is anticipated to slow, while retail activity may weaken. Nonetheless, Mr. Leechiu said malls could prove relatively resilient as consumers proceed to go to them, partly on account of amenities resembling free air con.
“So I feel yes, there might be a slowdown in malls, but not as bad as what people think it’s going to be,” he said.
He added that if geopolitical pressures persist and result in further price increases, consumer behavior inside malls could shift. Foot traffic may decline barely, but purchasing power could weaken more significantly.
“People will still be within the mall, but they’ll not be spending the identical way as pre-March 2, when the war began.” — Alexandria Grace C. Magno