IT-BPM sector drives Philippine office market recovery in first half of 2025

The Philippine office market showed strong growth in the first half of 2025, with demand reaching 740,000 square meters (sqm), or 67% of the 1.1 million sqm total for 2024, according to Leechiu Property Consultants.

"Demand has been strong in the first half of the year, and we’re optimistic that this momentum will continue," said Mikko Barranda, director of commercial leasing at Leechiu Property Consultants. "The IT-BPM industry remains the backbone of the office market, and as such, we are closely tied to its performance. That’s where we’re seeing the demand, so it’s critical that we continue to support and safeguard the industry. We need to ensure it has both stability and longevity — and we’re working alongside industry stakeholders to make that happen."

Barranda added, "With demand on an upward trajectory and office contractions tapering off, we’re on track to reach our projected net demand target of 490,000 sqm set in Q1. As of the first half of 2025, we're already touching 55% of that number."

This early momentum reflects the sector’s ongoing recovery, led by the robust performance of the Information Technology and Business Process Management (IT-BPM) industry, which continues to drive nationwide leasing activity.

In the first six months of 2025, the IT-BPM industry's demand reached 365,000 sqm, 86% of its total demand in 2024 (422,000 sqm), marking a significant acceleration in leasing activity. This signals a possible return to pre-pandemic levels, driven by expansion, outsourcing, and increasing confidence in the Philippine talent pool. The strength of the first half lays a solid foundation for the remainder of the year and affirms the sector's long-term growth trajectory.

The market has entered a new phase characterized by bold expansion rather than cautious relocations. Tenants are moving beyond "flight to quality" and are actively growing their footprint. Bonifacio Global City (BGC) led Metro Manila demand, surpassing its 2024 full-year total with 126,000 sqm transacted, 116% of last year’s volume. Cebu, meanwhile, accounted for 51% of provincial take-up, reinforcing its dominance outside the capital region.

Office Vacancy Steady

The overall office vacancy rate in the Philippines stands at 18%, based on a total supply of 3.2 million sqm. In Metro Manila, office supply has reached approximately 2.7 million sqm, with a matching vacancy rate of 18%. Provincial markets have a combined supply of 615,000 sqm and a slightly lower vacancy rate of 17%. Although vacancy rates continue to be high, the current strength in office demand offers the potential to bring these rates down over time.

Changing Tenant Preferences

Most demand in the first half of 2025 centered on buildings less than 10 years old, showing a clear preference for modern and efficient workspaces. While 64% of take-up was in Grade B buildings, 41% was in green-certified developments, suggesting that while location, price, and building age remain key drivers, sustainability is gaining traction as a complementary consideration.

Market Stability Strengthens

By mid-year, 55% of the projected 490,000 sqm in net demand for 2025 had already been achieved. More notably, the volume of tenant exits is on a consistent decline — dropping from 312,000 sqm in Q4 2024 to 267,000 sqm in Q1 2025, and further down to 203,000 sqm in Q2. This steady decrease signals improving tenant confidence, with businesses now committing to long-term occupancy and investing in new spaces.

Market Outlook

The market is poised for continued growth in the second half of 2025. With a combination of strong demand, fewer exits, and a broadening range of transaction sizes, the Philippine office sector is transitioning into a more stable and resilient environment. This shift points to a healthier and more balanced landscape, where growth is not only returning — but reshaping how and where businesses choose to operate.