OFFICE LEASING activity in Metro Manila surged in the first half of 2025, reaching levels not seen since 2017, as demand from the information technology-business process management (IT-BPM) sector drove a stronger-than-expected recovery, according to Leechiu Property Consultants (LPC).
“We are all shocked at the amount of leasing activity in the first six months of the year — we haven’t seen these levels since 2017,” LPC Founder and Chief Executive Officer David Leechiu said in a news briefing on Thursday.
“Even without the POGOs (Philippine offshore gaming operators), this is the highest level of activity we’ve ever seen — and this is despite companies talking about work-from-home setups and AI (artificial intelligence) taking over jobs.”
In the first half of 2025, the office market recorded 740,000 square meters (sq.m.) of leasing activity, according to LPC’s Second Quarter Philippine Property Market Report. This figure accounts for 67% of the 1.1 million sq.m. total demand recorded for the full year of 2024.
“In previous years, we’ve also seen strong take-up in the second half, so we’re banking on the possibility that demand could be even higher by yearend,” LPC Director for Commercial Leasing Mikko Barranda said on the sidelines of the briefing.
The Metro Manila office market experienced a slowdown in the second half of 2024, following the exit of POGOs and uncertainties stemming from the US presidential elections.
While US tariffs may introduce new risks to the market, Mr. Barranda said, “We didn’t see any direct effect on the office sector. So, if everything goes well, we might just see this momentum carry over for the rest of the year.”
The IT-BPM sector remains the backbone of the office market, accounting for 365,000 sq.m. of take-up in the first half of 2025 — equivalent to 86% of its full-year demand in 2024, LPC said.
As of end-June, the country had about 3.2 million sq.m. of office supply, with 2.7 million sq.m. located in Metro Manila and 615,000 sq.m. in the provinces.
Bonifacio Global City (BGC) recorded the lowest office vacancy rate at 10%, while the highest vacancies were seen in the Bay Area (27%), Alabang (25%), and Taguig (25%).
On average, office deals ranged between 2,000 sq.m. and 5,000 sq.m., with more tenants preferring buildings less than 10 years old.
OVERSUPPLYCondominium oversupply in some areas of Metro Manila grew in the first half of the year, even as buyer activity improved, according to LPC Director for Research and Consultancy Roy Amado L. Golez, Jr.
Residential demand posted two consecutive quarters of growth, with 6,643 units sold. New launches also rose by 31% from the previous quarter to 1,761 units.
Metro Manila’s condominium inventory rose to 82,800 units — equivalent to three years’ worth of supply.
“[Condominium inventory] grew slightly despite demand for 6,600 units, primarily due to new launches as well as cancellations or blackouts,” Mr. Golez said. “As a result, we are now down to 37 months of inventory from previous quarters. It’s still flat.”
Quezon City accounts for the largest share of unsold units at 19,500, followed by Ortigas with 15,000, the Bay Area with 13,800, and Manila with 11,400.
Take-up in the residential market has yet to return to pre-pandemic levels, Mr. Golez said, adding that developers remain cautious with new launches.
Despite recovering sales, rental rates remained soft, with the Bay Area posting the steepest decline at 50%. Rental yields ranged from 2% to 8%, indicating “relatively modest returns for property investors,” LPC said.
Expected interest rate cuts by the Bangko Sentral ng Pilipinas (BSP) could support stronger residential demand, Mr. Golez said.
“We are hoping that home loan interest rates will improve, making it more palatable for investors to purchase units through financing and, at the same time, offer them for rental income,” he said.
The BSP recently said it has room for two more rate cuts amid a moderating inflation outlook. Last month, it lowered interest rates by 25 basis points to 5.25%. — Beatriz Marie D. Cruz
