Office Market Booms Again: 77% Jump in Net Absorption in Q1 2026

The Philippine office market is back in growth mode.

In the first quarter of 2026, the sector logged 133,000 square meters of net absorption, a 77% year‑on‑year jump in demand. This rebound is being driven mainly by IT‑BPM and other business‑services firms snapping up Grade‑A space, while landlords move faster to fill vacated units that had been lingering in the market over the past year.

For landlords, REIT investors, and corporate real‑estate planners, this headline is not just a “feel‑good stat”—it reshapes how you should price, lease, and even exit office assets in key hubs like Metro Manila and Clark.

What the 77% jump in net absorption actually means

“Net absorption” simply means the difference between new space taken up minus space vacated or returned. A 77% increase in Q1 2026 tells you that:

• More companies are expanding or relocating into new office space instead of staying put or shrinking.

• Vacancy is being absorbed faster than before, especially in prime business districts and secondary hubs linked to IT‑BPM clusters.

Translated into practice:

• For landlords and developers: You have more leverage to hold or push rents rather than offer oversized incentives.

• For REIT investors: Stronger leasing activity improves occupancy and cash‑flow visibility, which can support valuations.

• For occupiers: If you’re planning to relocate or expand, timing is critical—landlords may start tightening concessions as the market tightens.

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Where the demand is coming from

The bulk of this rebound is anchored on the IT‑BPM and business‑process services sector, which continues to be one of the country’s top foreign‑exchange earners. These firms are still expanding teams, adding new delivery centers, and rebalancing their footprint across Metro Manila CBDs (Makati, BGC, Ortigas) and emerging hubs like Clark, Cebu, and Iloilo, where office‑plus‑lifestyle environments are attractive to talent.

On the flip side, the market “turns cautious” once you look beyond the headline number. While net absorption is up, total inventory is also growing, and some secondary buildings are still competing hard on discounts and fit‑out contributions. That means:

• Grade‑A towers in core CBDs are in the strongest position to raise rents and reduce incentives.

• Lower‑grade or older buildings will likely stay under pressure, relying more on pricing and longer‑term leases to secure tenants.

How investors and landlords should position themselves

If you own or manage office assets, here are four tactical moves worth considering in this 77%‑growth environment:

1. Reassess your asking rents and incentives In buildings with strong occupancy and IT‑BPM or multinational tenants, now is the time to test whether the market will accept higher per‑square‑meter rates or fewer free‑rent periods. At the same time, avoid over‑pricing in secondary buildings where vacancy is still a concern; a “moderate rent increase with slightly reduced incentives” often works better than a sharp hike.

2. Focus on lease‑term strategy With demand stronger, landlords can push for longer lease terms (3–5 years) instead of short‑term “placeholder” deals. Longer leases insulate you from future downturns and give tenants stability.

3. Track tenant mix and sector exposure A portfolio concentrated in IT‑BPM and business services will benefit more from this wave of demand than one skewed toward traditional corporate tenants or sectors facing headwinds. If you’re an investor, consider tilting exposure toward assets anchored by IT‑BPM, healthcare‑back‑office, and shared‑service hubs.

4. Watch secondary hubs and satellite CBDs Places like Clark, Cebu, and select provincial cities are seeing their own mini‑boom as companies de‑congest from Manila and chase lower costs plus talent. For developers and private investors, these areas offer earlier‑entry opportunities—but require careful due diligence on infrastructure, connectivity, and quality of premises.

What this means for homebuyers and hybrid‑work households

At first glance, this is a “commercial” story, but it still affects residential buyers indirectly:

• Stronger office demand usually supports higher household incomes and steady employment in IT‑BPM and related services, which in turn sustains demand for nearby condos and townhouses.

• If your base salary or profitability is tied to this sector, a healthier office market is a positive signal for your long‑term liquidity and borrowing capacity.

For OFWs and NRI investors, this also matters if you’re eyeing:

• Office‑linked condos or serviced residences near top‑tier business districts.

• REIT exposure that tracks office occupancy and rental growth.

Final takeaway: What to do next

The 77% jump in net absorption in Q1 2026 is a clear sign that the Philippine office market has turned a corner after a patchy recovery. Whether you’re a landlord, REIT investor, corporate real‑estate planner, or even a homebuyer with IT‑BPM income, the key is to align your strategy with this trend:

• Landlords: Tighten incentives where occupancy is strong; be realistic where it’s not.

• REIT / institutional investors: Look for portfolios with high IT‑BPM exposure and Grade‑A CBD or quality secondary‑hub assets.

• Occupiers and hybrid households: Use the data to time expansions, relocations, or financing decisions—before the market fully “catches up” to the latest demand spike.

Source: Ziggurat Real Estate

Global Housing Crisis Deepens as Costs Surge 40%—What It Means for Buyers

The global housing market is sending a clear signal in 2026: affordability is no longer just a local issue—it has become a worldwide crisis. Recent reports from major publications such as The Guardian and The Wall Street Journal point to a striking trend—housing costs in many advanced economies have risen by as much as 40% over the past five years.

Although these headlines focus on markets like the United Kingdom, the United States, and parts of Europe, the effects are not confined to those regions. For Filipino homebuyers, overseas workers, and property investors, global housing pressures are increasingly influencing decisions closer to home.

Across developed markets, rising home prices, elevated borrowing costs, and persistent supply shortages have created a difficult environment for buyers. Even as interest rates begin to stabilize, affordability remains strained because property values have not significantly declined. This dynamic has broader implications. When property becomes too expensive in major global cities, capital tends to flow toward emerging markets. At the same time, overseas Filipino workers may feel financial pressure abroad, which can affect their ability or timing when investing in property in the Philippines. Investor behavior also shifts, with greater emphasis placed on value, yield, and long-term sustainability rather than speculative gains.

The roots of this affordability crisis are structural. Housing supply has been constrained for years due to underbuilding, regulatory barriers, and rising construction costs. Financing has also become more expensive compared to the ultra-low interest rate environment seen during the pandemic. Meanwhile, demand remains resilient, particularly from high-net-worth individuals who continue to acquire property in prime locations. Urban centers also continue to attract people due to economic opportunities, ensuring that demand does not easily fade even when affordability worsens.

For buyers in the Philippines, these global developments create a mix of challenges and opportunities. On one hand, Philippine real estate appears relatively more affordable compared to major global cities, which can attract returning overseas workers and investors looking for better value. Demand in key urban areas such as Metro Manila, Cebu, and Davao is therefore likely to remain stable, particularly in segments that cater to end-users and rental markets. On the other hand, affordability is still a concern locally. Construction costs are rising, borrowing is more expensive than it was a few years ago, and income growth does not always keep pace with property price increases.

These conditions are reshaping how people approach real estate decisions. Buyers are becoming more deliberate, placing greater importance on location, accessibility, and long-term usability rather than simply chasing well-known developments. Flexible payment terms are gaining importance, as developers compete to attract cautious buyers. Investors, meanwhile, are returning to fundamentals, asking whether a property can generate consistent rental income rather than relying solely on price appreciation.

At the same time, periods of affordability pressure often create openings for those who are prepared. Emerging locations tied to infrastructure development are becoming more attractive as alternatives to expensive central business districts. In segments where supply remains elevated, such as certain condominium markets, buyers may find increased room for negotiation. For those with a long-term perspective, real estate continues to serve as a hedge against inflation, particularly in a country like the Philippines where population growth and urbanization remain strong.

The broader message is clear. The global housing affordability crisis is not just a challenge—it is a shift in how real estate markets function. Property decisions today are no longer purely local. Global trends now influence pricing, demand, and investment flows in ways that were less pronounced in the past.

For Filipino buyers and investors, adapting to this reality is essential. Those who recognize how global forces shape the local market—and who respond with informed, strategic decisions—will be better positioned to find value and opportunity despite a more complex environment.

Source: Ziggurat Real Estate