DEMAND for office space outside Metro Manila has been “less robust” as office occupiers now have smaller space requirements, real estate services firm JLL Philippines said.
“After the pandemic, I think the demand has weakened in general because for the key cities outside Metro Manila like Cebu and Iloilo, we’re still seeing a bit of takeup, but for the other peripheral areas, it’s not as robust anymore,” JLL Philippines Head of Research and Strategic Consulting Jan-Loven C. de los Reyes said at a briefing last week.
Many occupiers are optimizing their spaces or reassessing their office footprint, he said.
“For some of them, the challenge that they’re facing now is because they have smaller requirements in general,” Mr. De los Reyes said. “It’s difficult for them to find a landlord that will accommodate that space requirement.”
Office space requirements now average between 1,000 and 5,000 square meters (sq.m.), compared to the pre-pandemic average of 5,000 to 10,000 sq.m., Mr. De los Reyes told BusinessWorld.
According to JLL Philippines, office vacancy is expected to reach around 19.2% to 19.7% by yearend due to an additional 125 sq.m. of stock with low pre-commitment levels.
In the third quarter, the vacancy rate for Metro Manila offices dropped by 55.6 basis points (bps) to 19% from 19.5% in the same period a year ago.
It also declined by 37.5 bps from 19.4% in the second quarter.
Parañaque City had the highest vacancy rate at 38.2%, followed by Manila City (36.3%) and Pasay City (23.3%).
Leasing volumes in the office market jumped by 32.1% to 513,624 sq.m. in the third quarter from 388,952 sq.m. last year, driven by take-ups from business process outsourcing and government agencies, JLL Philippines said.
Meanwhile, real estate services and investment firm CBRE expects leasing activity to be tepid in 2025 amid the slow growth this year.
“When we did our planning this year, looking at 2025, we didn’t provision a very aggressive growth number,” CBRE Philippines Country Head Jie C. Espinosa said in a separate briefing late Tuesday.
“We essentially just provisioned minimal growth, primarily because we were expecting a much better year this year from the market, but as we look at the numbers, it looks like it’s not gonna even match last year’s number. So we’re trying to be conservative about it.”
CBRE noted that office vacancy rose to 19.9% in the third quarter from 18.8% in the same period last year.
For 2025, CBRE expects provincial office supply at 339,100 sq.m., 142,400 sq.m. in 2026, 97,400 sq.m. in 2027, and 77,700 sq.m. in 2028. — Beatriz Marie D. Cruz
