Rezoning and revitalizing Makati CBD

The Makati central business district (CBD) continues to enjoy its stature as the Philippines’ primary financial district. Major outsourcing, multinational, and large Filipino companies gravitate towards the country’s premier financial hub. This has been compelling national developers to expand in the business district despite the obvious lack of developable land in the business hub.

What’s interesting is that there are proposals to amend the zoning ordinance of Makati CBD. Among the Makati Central Estate Association, Inc.’s (MACEA) proposed changes include increasing the allowable floor area ratios (FAR) for office and retail developments. All lots will now be mixed-use. The new zoning ordinance also establishes the “superblocks” system, and a bonus FAR of 1.5 for lot owners that will incorporate breezeways and civic plazas into their developments.

Meanwhile, the Makati local government, major developers, and other stakeholders should also take into account the viability of expanding retail spaces; the city’s sustainability initiatives — given the popularity of healthy and sustainable workspaces; and the efficiency of mass transit systems (especially now that the construction of Makati subway has stalled) and parking spaces across the business district.

TAKING ADVANTAGE OF MAKATI CBD’S DWINDLING AVAILABLE OFFICE SUPPLY

From 2025 to 2029, Colliers projects the delivery of nearly 2 million square meters of new office space in Metro Manila, with Makati CBD accounting for 15% of the new supply. Among the new office towers likely to be completed during the period are Calistoga Office Building, Mckinley Exchange Corporate Center 2, PHC Buendia, The Gentry Corporate Plaza and the redevelopments of BDO, BPI, Metrobank and Chinabank HQs.

Assuming current market conditions continue, Colliers projects that Makati CBD may shift to a landlord’s market as early as next year, due to limited new supply over the next two years. While several major banks are developing new headquarters in the CBD, most of these are expected to be completed by 2029 onwards. The duration of a potential landlord’s market may be protracted unless a substantial portion of space in these HQs is made available for lease to the market.

With office availability dwindling and many existing buildings aging, redevelopment is becoming increasingly imperative to meet evolving demands. Colliers sees the MACEA’s proposed zoning amendments as a key catalyst in driving the redevelopment of the Makati CBD. These proposed changes include increasing the allowable FAR for office developments in Legazpi and Salcedo Villages, as well as permitting mixed-use developments along major thoroughfares. Colliers recommends incentivizing redevelopment projects — particularly those that integrate sustainability — as a critical step in future-proofing the CBD.

NEW CONDOMINIUMS LIKELY TO REPLACE OLD BUILDINGS

From 2025 to 2029, Colliers expects the completion of 20,700 condominium units in Metro Manila, with Makati CBD likely accounting for 12% of the new supply. Majority of these are luxury projects including Arthaland’s Eluria, Alveo Land’s Parkford Suites, and SMDC and Federal Land’s The Estate. Due to the lack of developable land in Makati CBD, property firms have been redeveloping old and existing properties into new residential projects. For instance, Ayala Land Premier redeveloped the Mandarin Oriental Hotel and LeParc Apartments into Park Central Towers and Park Villas respectively. Meanwhile, the Dela Rosa Carpark 2 will be converted into an ultra-luxury project called Laurean.

The proposed Condominium Redevelopment Act, a measure that was seen to complement new office and retail projects in Makati CBD failed to hurdle the last Congress. The bill is likely to be refiled in the next Congress which starts in July. We see Makati CBD benefiting from the measure’s enactment.

Makati CBD’s residential segment remains a cut above the rest. Its share to total unsold ready-for-occupancy (RFO) condominium units is only less than two percent of total unsold RFO across Metro Manila. Secondary and pre-selling condominium projects within Makati CBD are among the more expensive in the metro, especially those along Ayala Avenue and those located in Legaspi and Salcedo villages.

With the proposed rezoning and new projects in the pipeline, Makati CBD is definitely a hub to watch for in the years to come.

Source: Business World

OFW remittances, rate cuts may lift housing demand

Metro Manila's residential market is projected to see tempered launches of mid-income condominiums over the next three years, although anticipated interest rate cuts and steady inflows of remittances from overseas Filipino workers (OFWs) could help support demand for the segment, according to Colliers Philippines.

“Colliers is optimistic that further interest rate cuts and sustained remittances from Filipinos working abroad should partly lift the demand for mid-income projects,” Colliers said in its First Quarter Metro Manila Residential Report.

Pre-selling launches in the first quarter reached around 5,300 units, marking the highest quarterly level since the third quarter of 2023, Colliers said.

Among the notable projects launched during the period were Avida Land’s Avida Towers Makati Southpoint Tower 3 in Makati; 8990 Holdings, Inc.’s Urban Deca Tondo – Bldg. 7 in Tondo; and Shang Robinsons Properties’ Haraya Residences – North Residences in Bridgetowne, Pasig.

Despite the higher volume of launches, net take-up reached only 87 pre-selling units during the period, Colliers said.

Total back-outs, particularly for older developments, rose to 4,700 units in the first quarter, with the lower and upper mid-income segments accounting for 65% of the total.

Colliers said the central bank’s monetary easing, along with continued OFW remittance inflows, is likely to support a recovery in residential demand.

The Bangko Sentral ng Pilipinas (BSP) cut its policy rate by 25 basis points to 5.5% in April.

BSP Governor Eli M. Remolona, Jr. said the Monetary Board is open to two more rate cuts this year, with one possibly as early as June.

Cash remittances rose by 2.7% in the first quarter, based on BSP data.

“Lower interest rates should result in lower mortgage rates, and this should guide developers with their promos and payment schemes,” Colliers said.

In response, developers are advised to offer more flexible and curated payment terms for ready-for-occupancy (RFO) units, including leasing and early move-in promotions, it added.

Colliers also noted that developers must assess optimal product types and price points when expanding in key locations.

Upscale to luxury projects continue to perform well in central business districts such as Fort Bonifacio, the Makati Central Business District, and the Bay Area.

Meanwhile, mid-income projects remain more attractive in fringe locations such as Alabang–Las Piñas, Manila North, Makati Fringe, Mandaluyong, and the Caloocan–Malabon–Navotas–Valenzuela (CAMANAVA) corridor.

The residential vacancy rate in Metro Manila is expected to reach an all-time high of 26% in 2025, driven by the complete exit of Philippine offshore gaming operators (POGOs) and the scheduled completion of new condominium developments.

Colliers expects pre-selling launches to remain subdued in the near term.

From 2025 to 2027, new supply in Metro Manila is projected to average 5,800 units annually, down significantly from the 13,000-unit yearly average recorded from 2017 to 2019, during the peak of POGO-driven demand.

Despite the projected slowdown, Colliers said it is “not all doom and gloom” for the Metro Manila residential market.

“Recovery will focus around launching the ideal residential product at the right location with a viable price and favorable terms,” it said.

Source: Business World

Key trends shaping the 2025 office market

The Metro Manila office market navigated a challenging landscape in 2024, marked by high vacancy rates, shifting occupier strategies, and global economic uncertainties. As 2025 begins, key trends are emerging that could redefine demand dynamics, presenting both challenges and opportunities for occupiers and landlords alike.

US ELECTION SLOWS DOWN OFFICE LEASING IN Q4 2024

Metro Manila’s office market experienced a decline in transaction activity in the fourth quarter (Q4) of 2024, with total demand dropping to 143,000 square meters (sq.m.) from 192,000 sq.m. in the previous quarter. Colliers’ historical data show that demand typically dips by 30% during US election periods as occupiers delay leasing decisions, but rebounds by 40% in the following months as market confidence stabilizes.

Despite the temporary dip, expansions remained strong, signaling businesses’ confidence in the country. In 2024, expansions accounted for 56% of known transaction motivations, while 44% were relocations — primarily driven by cost-efficiency strategies and flight-to-quality movements. Traditional firms continued to be the primary demand driver, followed by third-party outsourcing (3PO) firms and shared services providers. Government agencies played a key role in traditional office space demand, accounting for 27% of total take-up.

The submarket dynamics in Metro Manila highlight the resilience of key business districts. Among Metro Manila’s submarkets, the Bay Area remained the most active, capturing 23% of total transactions, followed by Fort Bonifacio (18%) and Quezon City (17%). Key leasing transactions in the Bay Area were from government offices, while major sign-ups from multinational firms were seen in Fort Bonifacio, and expansions of IT-BPM firms were recorded in Quezon City.

POGO EXODUS’ IMPACT TO LINGER IN 2025

The lingering effects of the Philippine Offshore Gaming Operator (POGO) exodus weighed on the market, pushing Metro Manila into its first negative net take-up territory since 2021. In 2024, POGOs vacated 260,000 sq.m., and without the ban, net take-up could have remained positive at 215,000 sq.m.

The impact is most pronounced in POGO-exposed submarkets, particularly the Bay Area, Alabang, and Makati Fringe, where vacancy rates remain elevated. With the government’s continued crackdown on illegal POGOs, surrenders from these spaces will likely drive further increases in vacancy rates.

Despite these challenges, demand from other sectors has helped cushion the impact, with traditional firms, 3POs, and government agencies absorbing space. While the effects of the POGO exit will linger, ongoing transactions have prevented a worst-case scenario.

PROVINCIAL DEMAND REMAINS STRONG, DIVERSIFYING MARKET OPPORTUNITIES

Beyond Metro Manila, provincial office markets saw sustained demand, particularly from outsourcing firms. Cebu and Pampanga remained the top locations for provincial transactions, though Cebu recorded a year-on-year drop in volume — signaling possible market saturation of third-party outsourcing firms.

However, emerging office destinations such as Davao, Bacolod, Batangas, and Bohol saw a surge in demand, averaging a threefold increase in year-on-year transaction volume. Notably, some BPO players adapted to supply gaps by securing non-traditional spaces, such as Sagility’s lease within the redeveloped Tagbilaran Airport project. Additionally, newly built office buildings accounted for 60% of leasing activity, highlighting the need for high-quality, BPO-grade office spaces.

To capitalize on this trend, developers are encouraged to explore expansion in cities with limited office supply. Major developers such as Robinsons Land and Megaworld are already pivoting toward provincial growth with key projects in Iloilo, Bacolod, Bulacan, Davao, and Dumaguete. As more firms consider decentralizing operations, having high-quality office spaces will be critical in ensuring sustainable provincial market growth and attracting long-term occupiers.

WHAT TO EXPECT IN 2025

The office market is expected to remain tenant-leaning in 2025, as high vacancy rates persist due to non-renewals and carryovers from delayed construction of office buildings. However, early indicators from our Q1 2025 data suggest renewed leasing activity — particularly from 3PO firms in both Metro Manila and provincial locations — signaling a rebound in office demand.

Global economic conditions could further bolster the Philippines’ office market. With rising costs in key international markets, outsourcing remains a cost-effective strategy for multinational companies. The recent US tariff policies, as highlighted in our previous write-up, are expected to place additional cost pressures on US firms, making offshore solutions in the Philippines even more attractive. This trend could drive increased demand for office space, particularly from 3POs and shared services firms looking to expand their footprint in cost-efficient locations.

The passage of the CREATE MORE Act — particularly its provision allowing Registered Business Enterprises (RBEs) to implement up to 50% work-from-home (WFH) arrangements—will also play a crucial role in shaping office demand. In the short term, this policy may have varied effects: some firms may rationalize their office footprint, while others may see little to no change in their space needs as they are already compliant with the onsite requirement. However, in the long term, the clarity on hybrid work policies provides occupiers with a stable regulatory framework — reducing uncertainty and allowing companies to make more confident real estate decisions.

For tenants, current market conditions present an opportunity to secure favorable deals, while landlords must enhance their offerings to remain competitive. Landlords in the Bay Area, Alabang, and Makati Fringe — particularly those with aging buildings and spaces previously occupied by POGOs — will need to implement refurbishments, offer tenant improvement allowances, and introduce flexible lease structures to attract occupiers and mitigate vacancy risks.

Source: Business World