THE growing adoption of artificial intelligence (AI)-augmented workflows, particularly in the knowledge technology and business process management (IT-BPM) sector, could reshape office demand in Metro Manila by reducing incremental space requirements, in accordance with Cushman & Wakefield.
“Concurrently, the Philippine office market is being reshaped by the rising adoption of AI-augmented workflows — particularly within the IT-BPM sector—resulting in leaner team structures and reduced incremental space requirements,” Claro Cordero Jr., director and head of research, consulting and advisory services at Cushman & Wakefield, said within the property consultancy’s first-quarter market report.
He also said global business sentiment stays cautious amid the continuing Middle East crisis, prompting firms to expand flexible work arrangements and delay leasing decisions, which could soften office space net absorption over the following three to 6 months.
Metro Manila’s office emptiness rate eased to 17.1% in the primary quarter from 17.9% within the previous quarter, supported by regular leasing activity and limited recent supply across central business districts (CBDs) and decentralized office markets.
Net absorption reached 62,000 square meters through the quarter, driven largely by expansion from the IT-BPM sector, including business process outsourcing and shared services occupiers, with leasing activity concentrated within the Makati CBD and Bonifacio Global City.
Despite the advance in occupancy, average headline rents softened to P959 per square meter monthly because of more competitive pricing in higher-vacancy submarkets.
The report also showed a widening gap in emptiness levels between prime and non-prime office locations. Emptiness in core CBDs stood at around 10%, while decentralized markets continued to post elevated emptiness rates of 24.4%.
“The Metro Manila office demand remained resilient in early 2026, with regular leasing momentum in prime buildings despite softer economic growth and rising uncertainty. Nevertheless, ongoing Middle East tensions are weighing on business sentiment, prompting more cautious decision-making and wider adoption of hybrid work arrangements. That is prone to extend leasing timelines, but we expect this to vary as soon because the Middle East tensions improve,” said Dom Fredrick Andaya, country head of Cushman & Wakefield Philippines.
The property consultancy said rising energy costs, supply chain disruptions and construction inflation proceed to weigh on the local real estate sector.
The report also noted that demand for green and energy-efficient prime office spaces is increasing as occupiers prioritize energy resilience, while older office assets face weaker demand and lower yields.
Cushman & Wakefield also said investors and occupiers are increasingly prioritizing resilience, operating efficiency, and stronger tenant profiles amid economic uncertainty. — Juliana Chloe A. Gonzales