Stabilizing fundamentals set the stage for office sector growth — Colliers

THE PHILIPPINE office sector ended 2025 with a stronger-than-expected performance, signaling a clear shift from post-pandemic recovery toward a new phase of stable, sustainable growth. Despite persistent global and local headwinds, the office sector outpaced initial projections supported by reliable and long-term demand drivers. With key market fundamentals steadily returning to normal levels, the sector enters 2026 with a more positive outlook, guided by improving stability and emerging growth opportunities.

RETURN OF PRE-POGO DEMAND
Demand rebounded significantly in 2025, with Metro Manila recording 847,000 square meters (sq.m.) of office transactions — a 37% increase year on year (YoY). This level of transactions has already surpassed the annual demand recorded from 2015 to 2017, a period that predated Philippine Offshore Gaming Operators (POGOs).

Traditional occupiers and government agencies remained the primary demand drivers, accounting for 65% of total take‑up, while information technology and business process management (IT-BPM) firms accounted for 35%. Despite proposed anti‑outsourcing measures in the US, both third‑party outsourcing (3PO) firms and shared services continued to expand, reaffirming the industry’s long‑term commitment to the Philippines.

While overall IT‑BPM demand has not fully returned to pre‑pandemic highs, global capability centers (GCCs) stood out as a key growth segment. GCCs posted a 67% YoY increase, driven by expansions from existing players. The IT & Business Process Association of the Philippines (IBPAP) likewise expects the GCC segment to sustain this trajectory in 2026 and potentially outpace overall industry growth — an outlook that is likely to translate into continued demand for office space.

FORT BONIFACIO AND CEBU EMERGE AS TOP SUBMARKETS
At a submarket level, Fort Bonifacio emerges as the top location in Metro Manila, with expansion from multinational companies and outsourcing firms driving office take‑up. Colliers recorded a total of 232,000 sq.m. of office transactions in the submarket in 2025, a 57% growth YoY.

In our view, Fort Bonifacio will continue to be a relevant submarket in the years ahead, as it continues to draw in multinational firms. We believe that the upcoming infrastructure developments such as the MRT-7 subway stations in Uptown and Market! Market! areas along with the redevelopment of notable prime properties should further position Fort Bonifacio as a key growth area in Metro Manila.

Outside Metro Manila, Cebu remains a major office market hotspot, posting 121,000 sq.m. of office deals in 2025, nearly double the volume recorded in 2024. Expansions by existing IT-BPM firms fueled demand for office space in the area, further reinforcing Cebu’s reputation as the country’s leading provincial outsourcing hub.

While demand in Cebu IT Park and Cebu Business Park remains strong, availability in these locations may become challenging as no substantial office projects are slated for completion over the next three years. New supply will come mainly from areas outside the core districts, particularly in Mandaue and the Reclamation Area, which may become viable alternatives for occupiers seeking sizable, modern, and cost‑efficient spaces.

VACANCY AND RENTAL RATES REMAIN MIXED
Metro Manila’s vacancy rate eased to 19.4% by end-2025, supported by sustained demand, lower space surrenders and tempered completions. While demand and net take‑up have returned to pre‑pandemic ranges, overall vacancy remains in the double-digit territory, underscoring the lingering impact of earlier supply surges and space rationalization during the pandemic years.

Performance across submarkets remained uneven, with Makati Central Business District (CBD), Fort Bonifacio and Ortigas CBD posting below-market vacancies while secondary markets such as the Bay Area, Alabang and Makati Fringe continued to experience higher vacancies.

Rental movements also reflected this divergence. Overall rents remained subdued, but marginal increases were recorded in Fort Bonifacio and Makati CBD as vacancies tightened. While this may encourage landlords to raise rents, pricing strategies must remain value-driven, as occupiers continue to seek “well‑justified” deals. Any upward price adjustments should be supported by enhancements, including green and sustainability certifications, targeted refurbishments, improved building systems, and enhanced amenities.

Notably, major deals were concentrated in newer office buildings (i.e., completed within the past 5-10 years), underscoring a clear preference for newer, high‑quality assets. In districts with higher vacancies, landlords are encouraged to remain flexible with lease terms and do timely refurbishments of older properties to stay competitive.

OUTLOOK FOR 2026
With key market metrics returning to normal levels, we take an optimistic view of the office sector’s performance in 2026. The market has proven resilient despite continued headwinds both internationally and domestically, and we expect to see this resilience to carry through in 2026.

Emerging opportunities across Metro Manila and provincial markets provide a meaningful window for both occupiers and landlords to revisit their long‑term real estate plans. For developers, now is an opportune time to plan their long‑term office portfolios, particularly in locations such as Makati CBD, Ortigas CBD, Cebu IT Park, Cebu Business Park, Davao and Dumaguete where vacancies are tightening and occupier interest remain strong. Meanwhile, occupiers should also reassess their space strategies as they prepare for expansion and align their footprints with evolving organizational needs. With stability strengthening and demand drivers becoming more defined, 2026 is shaping up to be a year where both landlords and occupiers can position themselves more confidently for future growth.

Kevin Jara is director, while Kath Taburada is research manager, Office Services–Tenant Representation, at Colliers Philippines.