Metro Manila office rents seen to rise in some districts

Metro Manila’s key business districts are expected to face upward pressure on office rents this year, driven by strong demand from multinational firms and business process outsourcing tenants, analysts said.

“Rental performance will continue to be highly district-specific,” Mikko Barranda, director for commercial leasing at Leechiu Property Consultants, said.

Submarkets such as Bonifacio Global City (BGC) are likely to see upward pressure on rents as demand outpaces available supply, he said.

BGC posted the lowest vacancy rate among Metro Manila office submarkets at 9% as of end-2025, according to Leechiu Property Consultants’ Fourth-Quarter Property Market Report.

In contrast, districts with double-digit vacancy rates include Makati City (15%), Ortigas and Mandaluyong City (18%), Quezon City (19%), Taguig City (21%), Alabang (23%), and the Bay Area (28%).

“This trend will be reinforced by limited new completions and strong flight-to-quality preferences among multinational occupiers,” Mr. Barranda said.

He added that major central business districts (CBDs) such as Makati and BGC are expected to continue benefiting from strong tenant preference, constrained new supply, and sustained interest from multinational companies.

Submarkets with higher vacancy levels, however, may see “relatively flat rental growth in the near term,” he said.

Office rents in Metro Manila will remain a “case-to-case” scenario, said Kevin Jara, head and director of office services — tenant representation at Colliers Philippines.

“In established business districts with limited available space, such as Makati CBD, BGC and Ortigas CBD, we expect modest year-on-year rental growth in the range of 1% to 5%, supported by low vacancy levels,” he said in an e-mail.

“So far, we are not seeing any major space surrenders similar to the levels during the POGO (Philippine Offshore Gaming Operators) exodus, that could materially increase vacancy and put downward pressure on rents,” Mr. Jara noted.

However, Colliers is monitoring potential risks to office demand, including corporate layoffs overseas and the progress of proposed outsourcing-related bills in the United States, he said.

These include the Keep Call Centers in America Act and the Halting International Relocation of Employment (HIRE) Act, which aim to protect US-based call center jobs amid rising offshoring and the use of artificial intelligence-powered bots.

The Keep Call Centers in America Act seeks to limit federal benefits granted to companies that outsource call center jobs overseas.

Meanwhile, US Senate Bill 2976, or the HIRE Act, proposes a 25% excise tax on American firms’ payments to foreign service providers for work consumed in the United States.

Jamie S. Dela Cruz, research manager at Savills Philippines, said office rents in Metro Manila’s CBDs are likely to remain tenant-favorable overall.

She noted that elevated vacancy levels in some districts continue to give locators greater flexibility in lease negotiations, she said.

“Despite this, office demand continues to be supported by the information technology-business process management sector, as the industry works to remain competitive by enhancing skills and attracting more global shared services,” Ms. Dela Cruz said.

She added that higher-quality, green-certified office buildings continue to command higher asking rents.

“Less competitive office stock that remains vacant could put pressure to the overall market and potentially further soften rental rates,” she said.

Data from Leechiu Property Consultants showed that as of end-2025, BGC remained the most expensive office submarket at P1,167 per square meter (sq.m.), followed by Makati City at P891 per sq.m.

Other office rental rates were recorded in the Bay Area and Pasay City at P798 per sq.m., Alabang and Muntinlupa City at P787 per sq.m., Ortigas and Mandaluyong City at P738 per sq.m., and Taguig City at P724 per sq.m.

Source: Business World

Metro Manila rental yields may stay flat in 2026

Rental Yields in Metro Manila’s residential market are expected to remain flattish next year amid weak investor demand and lingering condominium oversupply, property consultants said.

“Yields will likely remain flat for the year 2026, with core central business districts (CBDs) recovering faster,” Roy Amado L. Golez, Jr., director for research, consultancy, and valuation at Leechiu Property Consultants (LPC) said.

“Rents in Bonifacio Global City and Taguig have already exceeded pre-pandemic numbers, while other locations remain at a significant discount. This situation will persist until supply is taken up,” he said.

Joey Roi H. Bondoc, director and head of research at Colliers Philippines, said rental yields will likely stay flattish next year as residential demand is driven mainly by end-users rather than investors.

“I think one reason why the ready-for-occupancy promos, for example, of certain developers are working is because the demand is actually end-user driven,” he said in a phone interview.

In Metro Manila, residential rental yields averaged 4.1% in the primary market, or properties sold by developers to end-users, LPC said in its fourth-quarter property market report.

Meanwhile, secondary market yields — which cover pre-owned units offered for sale or for rent by their owners — averaged 4.8%, based on LPC data.

“Secondary market units will continue to generate higher yields versus primary market units, since buyers will be acquiring units from sellers who bought these units at much lower prices,” Mr. Golez said.

Mr. Bondoc added that Metro Manila’s primary residential market continues to face an oversupply of 30,400 unsold units, equivalent to about eight years’ worth of inventory.

Most of the region’s condominium inventory falls under the affordable to lower middle-income segment, with units typically priced between P2.5 million and P6.99 million, Colliers data showed.

“Current prices of condominiums are on the high side, and with challenging rents, this results in lackluster yields. To boost rental yields, prices should remain flat — since we don’t really see widespread price cuts — to allow the market to catch up,” Mr. Golez said.

Joe Curran, chief executive officer at Savills Philippines, expects rental yields in the region to be “broadly stable to slightly firmer” next year, at around 4% to 6%.

He said lower interest rates, return-to-office mandates, and the long-term stay of expatriates and students could help lift rental demand in Metro Manila’s residential market.

To improve rental yields, developers should adopt a more disciplined launch pipeline for condominium projects, Mr. Curran said.

He also cited the need for stronger marketing and proactive maintenance to make unsold condominium units more attractive for leasing.

“While Metro Manila stock continues to grow, supply that remains aligned with genuine end-user and rental demand should support stronger pricing power over the medium term,” Mr. Curran said in an e-mailed reply to questions.

For 2026, Colliers projects residential vacancy to ease to 26% from 26.5% as of end-2025, as developers slow the launch of residential projects in Metro Manila.

Source: Business World

Metro Manila condo inventory may take up to three years to clear

Unsold condominium units in Metro Manila could take about two to three years to be fully absorbed, particularly in areas previously occupied by Philippine offshore gaming operators (POGOs), property consultancy Leechiu Property Consultants (LPC) said.

“I think it will still take about two years, probably three years, to clear out the POGO-induced supply, especially in central business districts where there was heavy POGO presence,” Roy Amado L. Golez, Jr., LPC director for research, consultancy, and valuation, told a media briefing on Wednesday.

As of end-November 2025, Metro Manila’s middle-income condominium inventory rose to 80,300 units across 578 actively selling buildings, up from 74,600 units in the previous quarter. This represents roughly three years and six months of available supply.

Of the total, 53,900 units are pre-selling, while 26,400 are ready-for-occupancy. Quezon City recorded the highest number of unsold condominiums at 19,300 units, followed by the Ortigas area and the cities of Mandaluyong, Pasig, and San Juan with 14,200 units, and the Bay Area with 13,000 units.

Metro Manila continues to grapple with an oversupply of units in the upper middle income to upscale segments, typically priced between P4 million and P12 million, particularly in areas affected by last year’s government POGO ban.

“Fewer speculative buyers dampen primary take-up, while motivated sellers from the POGO period compete in the secondary market with aggressive pricing, further slowing absorption,” LPC said.

Residential demand in the first 11 months of 2025 fell to a six-year low of 24,732 units, down from 42,563 units sold in the same period of 2020. Year on year, units sold declined by 3% from 25,565 units in the first 11 months of 2024.

“But then, there’s still one more month to go, so hopefully developers can sweep all the potential sales and catch up,” Mr. Golez said.

New condominium launches as of end-November dropped by 60% to 5,256 units from 13,226 units a year ago, marking the lowest level since 29,739 units launched in 2020.

“We have a market here where developers are conscious of inventory and are also experiencing low sales. At the same time, reservation sales and actual sales have been flattening or tapering off,” Mr. Golez said.

“The issue in the last few years is that price increases have been too aggressive for many developers,” he added.

Despite the high inventory of unsold units, the Philippines continues to face a growing housing backlog, Mr. Golez noted.

In the office sector, global capability centers (GCCs) — firms specializing in healthcare, finance, and other services — are expected to drive tenant demand in 2026.

“As we enter next year, there is a high probability that tenants will continue to require spaces of 5,000 to 10,000 square meters (sq.m.), especially among global capability centers,” LPC Director for Commercial Leasing Mikko Barranda said.

Year-to-date, office leasing demand in Metro Manila grew 10% to 1.22 million sq.m. from 1.11 million sq.m. during the same period in 2024. The information technology-business process management sector accounted for 549,000 sq.m., followed by traditional firms at 563,000 sq.m., global capability centers at 174,000 sq.m., and government tenants at 74,000 sq.m.

Vacated office space in the fourth quarter fell 59% to 85,000 sq.m. from 205,000 sq.m. in the previous quarter. Year-to-date, LPC recorded 744,000 sq.m. of vacated space.

“As tenants realize that certain districts have a very tight market for certain space sizes, we will likely see spillover activity into other districts,” Mr. Barranda said.

At present, Metro Manila has an office vacancy of 18%, with Bonifacio Global City still the most favored location with a 9% vacancy rate, followed by Makati City at 15%.

Source: Business World