By Beatriz Marie D. Cruz, Reporter
THE Philippine office market may face rising vacancies by 2027 as new supply is expected to outpace demand, according to property consultancy PRIME Philippines.
“At least for 2026, office occupancy will climb closer to 90%. Then in 2027, it could balance out at around maybe 85% to 87% because of the new completion that will come in,” PRIME Philippines Founder and Chief Executive Officer Jettson P. Yu told BusinessWorld on the sidelines of a briefing on Friday.
In Metro Manila alone, PRIME expects between 328,000 square meters (sq.m.) and 478,000 sq.m. of new office supply through 2027.
“With office supply expected to increase between 1% and 2% in 2026, a downward pressure on overall occupancy and lease rates is expected as expansions may not exceed or keep pace with additional space,” the property consultant said in a report.
The Metro Manila office market ended 2025 with an 85% occupancy rate — 1.8 percentage points higher than a year earlier — as tenants such as business process outsourcing (BPO) firms, professional services companies, and government agencies drove take-up.
By submarket, the Makati Central Business District (CBD) recorded the highest occupancy rate in 2025 at 90.5%, followed by Bonifacio Global City (89.5%), Ortigas CBD (89.4%), Muntinlupa City (80.9%), and Quezon City (82.2%). The Bay Area posted the lowest demand, with a 68.5% occupancy rate.
PRIME also noted strong office demand in regional areas, particularly in Metro Davao, Metro Cebu, Metro Clark, Iloilo, and Bacolod.
“To be honest, we are still yet to see the holy grail that would replace the POGO (Philippine Offshore Gaming Operators) tenants,” Mr. Yu said.
Looking ahead, BPO tenants are expected to continue supporting the office market, with more expansion activity seen outside Metro Manila, including in Cavite, Iloilo, Laguna, and Bacolod.
INDUSTRIAL
In the industrial real estate sector, locators continue to favor build-to-suit spaces, as well as “hybrid” warehouses that combine storage with onsite sales, drop-off, and pick-up, said Joy Rosario, vice-president for the industrial market at PRIME Philippines.
In 2025, the country’s industrial sector posted a 97.3% full-year occupancy rate, driven by strong demand in key areas such as Metro Davao (98% occupancy), Misamis Oriental (98%), and Laguna (97.9%). Bulacan, Pampanga, and Cavite each registered occupancy of 97.4%.
The top demand drivers for warehousing include wholesale and retail trade (29.14%), transportation and storage (24.13%), and manufacturing (14.91%).
For this year, new warehouse supplies are expected to come from Pangasinan, Cavite, and Batangas, the report noted.
Meanwhile, Mr. Yu said some property developers have been liquidating assets while shifting investments to other ventures.
He said one developer sold Metro Manila properties to invest in cold storage facilities, while another liquidated residential assets to focus on renewable energy. He added that one developer has shifted from townships to high-end villages.
“That’s a massive signal that they are raising liquidity, lessening their debts, and at the same time, repositioning for the next five to 10 years,” Mr. Yu said at the briefing.
