Metro Manila office sector recovers 

Metro Manila's office sector is showing clear signs of recovery in 2025, with rising take-up, steady new supply, and stable lease rates pointing to renewed confidence in the market, according to a new report.

Net absorption reached 192,000 square meters (sqm) in the first half and could hit 400,000 sqm by year-end, marking the strongest demand since 2019, real estate consultancy Santos Knight Frank (SKF) said in its H1 2025 report.

"This is shaping up to be the best year for the office market post-pandemic. We're seeing real momentum again in take-up and expansions," SKF senior director of occupier strategy Morgan McGilvray told a briefing on Monday.

Developers delivered 160,000 sqm of new Grade A and Prime office space in the first half, pushing total stock in Metro Manila to 9 million sqm, up from 3.6 million sqm in 2015, effectively tripling over the past decade.

An additional 400,000 sqm is expected in the second half, bringing full-year completions to half a million sqm. This includes projects conceptualized during the pandemic, most of which are expected to be completed by 2030, closing out the COVID-era pipeline.

McGilvray said the capital's office market has evolved into a clear two-tier structure, as Taguig and Makati remain the most in-demand and expensive submarkets, while other districts offer more affordable options with higher vacancy.

He noted Taguig is the largest and priciest office submarket, with average rents over 1,280 Philippine pesos (about $21.80) per sqm. In Bonifacio Global City, rates hover closer to 1,350 pesos per sqm.

In Makati, asking rents are similar, though the market is split between tight core central business district (CBD) areas and fringe zones where new buildings offer more space.

Other areas, including Ortigas, Quezon City, the Bay Area, and Alabang, have vacancy rates above 20% and asking rents below 950 pesos per sqm, attracting cost-conscious tenants.

Office activity is also picking up outside Metro Manila, with Cebu currently being the most active, while Clark, Bacolod, Iloilo, and Davao are gaining traction as second-tier hubs.

"In Davao, we're even seeing demand outpace current supply in high-grade buildings," McGilvray noted.

The property consultancy firm highlighted Manila as one of the most cost-competitive office markets in Asia-Pacific, now ranking fourth in regional benchmarks for prime occupancy costs.

"Crucially, it is now more affordable than Bangalore, a key BPO competitor. This shift boosts the Philippines' appeal to multinationals scouting locations for shared services and back-office operations," McGilvray reported.