Manila office market resilient despite global risks: Colliers

MANILA, PHILIPPINES — Metro Manila’s office vacancy rate edged down to 19% in the first quarter of 2026 — from 19.4% in the fourth quarter of 2025 — as stable leasing activity and the absence of new office completions kept the market on steady footing despite ongoing geopolitical and economic headwinds, property consultancy Colliers reported as cited by Manila Bulletin.

Transactions rise 12% as traditional firms lead demand

Office transactions across Metro Manila reached 193,000 square meters (sqm) in Q1, up 12% year-on-year. Fort Bonifacio led all submarkets with 40,000 sqm transacted, followed closely by Makati CBD with 38,000 sqm.

Traditional occupiers — legal, engineering, and construction firms, government agencies, and flexible workspace operators — accounted for 67% of transactions, with third-party outsourcing firms contributing 23% and shared services firms 10%.

Information technology and business process management (IT-BPM) firms alongside traditional occupiers continued to drive demand through new setups and expansions, even as deal sizes contracted across all tenant classes.

“Average sizes of deals have decreased across all tenant classes, indicating smaller deals are happening in the market,” Colliers said.

Supply pipeline and rental stability temper near-term risks

Approximately 505,000 sqm of new office supply is expected to come online by the end of 2026, with Arca South, Bay Area, and Quezon City accounting for roughly half of the incoming inventory.

Rental rates held firm across Metro Manila during the quarter, with premium and Grade A office rents in Makati CBD posting marginal quarter-on-quarter growth of 0.7%.

“The Philippine office market showed resilience in the first quarter, but uncertainty remains as the conflict in the Middle East continues,” said Kevin Jara, Director for Office Services-Tenant Representation at Colliers Philippines. 

“Waiting out the crisis is a risk in itself. Occupiers and landlords who act now — securing leases early, refurbishing aging assets, and embracing flexible solutions — will be well-positioned to capture the upside as conditions improve,” Jara added.

Available PEZA-accredited office inventory in Makati CBD, Fort Bonifacio, and Ortigas Center has fallen to a combined 478,000 sqm — a narrowing supply base that directly limits IT-BPM expansion options in the Philippines’ prime business districts. 

Colliers warns the constraint will worsen unless Administrative Order No. 18 is lifted or new ecozone projects receive government proclamation. With controlled new supply projected to average just 308,000 sqm annually over the next four years, BPO and shared-services operators planning long-term footprint growth need to act earlier than current market stability alone suggests.