Digital cities reshape Philippine office real estate
MANILA, PHILIPPINES — Business process outsourcing (BPO) operators are shifting office demand away from Metro Manila toward the Philippine government’s designated Digital Cities, as the country’s information technology and business process management sector targets revenue of $43.3 billion to $50.5 billion and a workforce of 2.14 million employees by 2028.
Metro Manila vacancy rises as digital cities tighten
The Department of Information and Communications Technology identified 25 high-growth locations in its 2025 Digital Cities list, evaluating municipalities on talent availability, infrastructure, cost-effectiveness, and business environment. The program was established in 2020 and is backed by a government roadmap through 2028.
According to a report from Manila Bulletin, in its mid-year property market outlook, Lobien Realty Group reported that active BPO and IT-BPM demand is moving toward Digital Cities, which offer competitive setups, tax incentives, and capable provincial talent pools.
“Metro Manila and leading digital cities are moving in opposite directions. The capital region’s vacancy rate remains elevated, having risen sharply during the POGO fallout, though prime districts like Makati and BGC have remained comparatively resilient, while secondary submarkets lag. In contrast, several digital cities are seeing vacancy tighten, shifting leverage towards landlords in those markets,” said Sheila Lobien, CEO at Lobien Realty Group.
CREATE MORE and POGO exit accelerate the provincial shift
The 2024 shutdown of Philippine offshore gaming operations (POGO) removed a significant volume of Metro Manila office demand almost overnight, pushing vacancy to one of its highest levels in decades.
CREATE MORE legislation now formally permits hybrid and work-from-home arrangements while preserving tax incentives, removing a structural barrier that had previously anchored IT-BPM operators to centralized Metro Manila offices.
Digital Cities offer lower operating costs, local talent pools, and no POGO-related oversupply, giving provincial markets a structural cost advantage as global clients exercise greater caution on location commitments.
“The pandemic proved service delivery doesn’t require a single centralized office, weakening the case for Metro Manila concentration. The 2024 POGO shutdown then removed a significant volume of office demand almost overnight, pushing Metro Manila vacancy to one of its highest levels in decades. Add ongoing macroeconomic uncertainty and caution from global clients following the Iran conflict, and companies are now prioritizing cost stability and lower risk exposure,” Lobien said.
For buyers evaluating outsourcing in the Philippines, the Digital Cities shift offers a lower-cost alternative to Metro Manila with improving infrastructure and government backing, though Lobien cautioned that investment will concentrate in proven performers rather than spread evenly across new entrants.
Business process outsourcing (BPO) operators and shared services centers are cited as the highest-growth segments for early positioning in Digital City markets, as the sector’s own 2028 revenue targets have been revised downward due to AI adoption and rising global competition.
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