By Beatriz Marie D. Cruz, Reporter
METRO MANILA’S office vacancy rate is projected to drop below 10% by 2028, fueled by the steady expansion of the information technology and business process management (IT-BPM) sector, according to real estate services firm CBRE.
In its Mid-Year Property Market Briefing on Friday, CBRE said the Metro Manila office sector is expected to reach a single-digit vacancy rate by 2028 under two key scenarios.
By 2028, CBRE projects office vacancy could drop to 3.6% if the IT-BPM sector becomes more aggressive in its expansion.
“The lower [vacancy] scenario will be if the IT-BPM sector continues to grow by around 10-15% in terms of number of FTEs (full-time employees) per year,” CBRE Philippines Country Head Jie C. Espinosa told reporters on the sidelines of the briefing.
Under a conservative scenario, office vacancy may fall to 8.3% in 2028, “based on historical data over the past three years, where the growth of demand was around 2.4% only,” he added.
Office vacancy in the Philippine capital slightly rose to 20.3% in the second quarter from 20.1% in the first quarter.
This comes as demand in the Metro Manila office market declined by 1% to 219,400 square meters (sq.m.) in the second quarter from 221,810 sq.m. in the previous quarter.
Third-party outsourcing firms drove office demand during the April–June period, particularly InTouchCX (14,000 sq.m. of take-up), Concentrix (14,000 sq.m.), and Teleperformance (17,260 sq.m.).
Year on year, demand was also 17.21% weaker than the 265,000 sq.m. take-up recorded in the second quarter of 2024, shortly before the ban on Philippine Offshore Gaming Operators (POGOs).
Since the POGO ban last year, about 197,400 sq.m. of office space has been vacated, bringing the total vacated space in Metro Manila to 995,600 sq.m. as of the second quarter.
When asked if office vacancies in Metro Manila could reach one million sq.m. this year, Mr. Espinosa said: “I think it will, but the additional vacated spaces every quarter could go down.”
“Hopefully, the growth of the IT-BPM sector offsets whatever POGO closures there might have been quarter on quarter,” he added.
Mr. Espinosa also noted that office developers have been managing their inventory, adding about 250,000 sq.m. to 300,000 sq.m. of new office space annually.
“Because of the high vacancy situation at the moment, they don’t want to flood the market with supply that ultimately the market cannot catch up and lease,” he said.
“Ultimately, most of the developers here are waiting for the vacancy to go down before they start building aggressively again.”
At present, Metro Manila has 1.84 million sq.m. of office supply, with 54% vacated and 46% consisting of new and unleased space, CBRE said.
Of the available supply, over 808,000 sq.m. is unleased, while 31,300 sq.m. is newly completed space.
Meanwhile, Cebu continues to lead the provincial office market, with a vacancy rate of 17.9% in the second quarter, down from 18.3% in the previous quarter.
CBRE also noted improved vacancies in other provincial submarkets: Iloilo (25.3% in the second quarter from 30.6% in the first quarter); Clark, Pampanga (31.7% from 32.2%); and Davao (11.2% from 11.9%).
The Bacolod office market, however, saw vacancy jump to 53.4% in the April–June period, following the recent completion of the 17,500-sq.m. SM North Block.
Meanwhile, the industrial and logistics sector saw gains in the second quarter, with vacancy improving to 6.7% from 9.6% in the first three months. This covers the submarkets of Cavite, Laguna, and Batangas (Calaba), CBRE said.
As of end-June, the Calaba industrial market had 435,800 sq.m. of total available warehouse space. Of this, 253,000 sq.m. is in Laguna, 101,600 sq.m. in Cavite, and 81,100 sq.m. in Batangas.
For the remainder of the year, the Calaba industrial submarkets have about 46,800 sq.m. of upcoming supply and 5 million sq.m. of total available land.
