GCCs drive Philippine office demand amid slowdown
MANILA, PHILIPPINES — Philippine office take-up reached 488,000 sqm in the first half of 2026, down 32% year-on-year as geopolitical uncertainty and the 90% work-from-home policy slowed occupier decisions — but the active pipeline of 353,000 sqm tells a different story.
According to a report from Leechiu Property Consultants, with Global Capability Centers accounting for 88,000 sqm of the IT-BPM segment’s 155,000 sqm demand, outpacing third-party business process outsourcing (BPO) outsourcers in live requirements for the first time.
Philippine take-up falls 32%; GCCs anchor the live pipeline
The 488,000 sqm gross demand figure reflects broad occupier caution — with net demand reaching 293,000 sqm as vacated spaces fell 57% year-on-year to 195,000 sqm, suggesting tenants that right-sized their footprints in 2025 chose to retain existing space rather than exit further, cushioning the softer take-up and keeping net absorption positive through the half.
IT-BPM demand held comparatively firm, declining only 10% from 94,000 to 85,000 sqm between Q1 and Q2 2026, against a 29% quarterly drop for traditional occupiers — a resilience gap that the live pipeline confirms as structural rather than seasonal.
With just nine of 132 H1 transactions exceeding 5,000 sqm, deal-making skewed toward smaller commitments — but 20 active pipeline requirements exceed that threshold, indicating that larger transactions are deferred rather than canceled, and that the market’s second-half trajectory will be determined by how quickly GCC-driven requirements convert into signed deals.
“This is more of a pause than a pullback — companies remain committed to growth, and as businesses adapt to the evolving geopolitical environment, real estate decisions are expected to gain momentum in the second half of the year,” said Mikko Barranda, Director of Commercial Leasing, Leechiu Property Consultants.
BGC space crunch and the 200-vs-2,000 GCC gap frame the upside
Of the 353,000 sqm live pipeline, IT-BPM leads at 155,000 sqm — with GCCs at 88,000 sqm outpacing third-party BPO outsourcers at 67,000 sqm — followed by traditional occupiers at 128,000 sqm and the government sector at 70,000 sqm, with 20 active requirements above 5,000 sqm concentrated in prime outsourcing hubs.
BGC — the preferred address for large PEZA-accredited requirements — has only five buildings offering 5,000 sqm or more of contiguous space totaling 43,000 sqm, the tightest large-block inventory of any district, with vacancy at 8% and no new supply scheduled in Makati CBD or Ortigas Center until after 2028, reinforcing structural scarcity at the preferred offshoring address for global enterprises.
The Philippines currently hosts approximately 200 GCCs against India’s 2,000-plus — a gap that Leechiu identifies as the sector’s primary long-term demand driver, with Makati, BGC, and Cebu positioned to absorb offshore expansion as more global enterprises establish high-value functions in the country.
For BPO operators and real estate investors tracking the Philippine office market, BGC’s 8% vacancy and the 200-vs-2,000 GCC gap represent the same structural dynamic: supply constraint at the most-preferred offshore delivery address and a decade of GCC growth still ahead, with the active requirements pipeline confirming that the demand is present and waiting on conditions to clear.
“Global Capability Centers continue to be the strongest driver of office demand — the Philippines is still in the early stages of the GCC growth story. India has over 2,000 Global Capability Centers, while the Philippines has only around 200. That gap represents a significant long-term opportunity as more companies establish higher-value functions in the country,” said Barranda.
For offshore operators and investors tracking Philippine real estate, the H1 2026 LPC data confirms that demand has deferred rather than departed — and that when the 2H 2026 pipeline converts, GCCs will lead it, a finding consistent with IBPAP‘s growth trajectory for the Philippine IT-BPM sector.
