Net absorption, or the total space occupied minus space vacated, is expected to reach 490,000 square meters by year-end, driven by stable leasing activity and fewer space contractions as POGO-related exits taper off.
In the first quarter of 2025, office demand hit 355,000 square meters. This is a 7 percent increase from the same period last year, even without contribution from POGOs or government-related transactions.
This was largely fueled by the IT-Business Process Management (IT-BPM) sector, particularly Global In-House Centers (GICs), with significant demand from healthcare and financial services firms.
Experts’ view
“The office market in the Philippines continues to show grit in the face of global and local challenges,” said Mikko Barranda, Leechiu director for commercial leasing.
“The IT-BPM sector remains to be a reliable key driver of growth, while traditional office tenants are also increasingly active. With a promising outlook for the rest of the year, we expect resiliency amidst potential,” he added.
Rising hotspots
Metro Manila remained the country’s leasing hotspot, led by Ortigas, Mandaluyong, and San Juan with 59,000 square meters leased, signaling growing interest in cost-competitive submarkets.
Bonifacio Global City followed, already absorbing 51,000 square meters in the first quarter alone, or 40 percent of its total 2024 take-up.
Vacated office space declined from 312,000 to 277,000 square meters as POGO exits slowed, easing supply pressure and helping stabilize the market.
The nationwide vacancy rate held steady at 17 percent, improving from 18 percent in the previous quarter.
While still elevated, vacancy is expected to trend downward in the coming months as more active leasing requirements are converted into signed deals, especially in key business districts like Makati and BGC.
