PH Office Market recovery gains momentum in 2025 — Colliers

The Philippine office market is showing stronger signs of recovery in 2025, with analysts noting that the sector is moving beyond short-term rebounds and entering a new phase of growth.

In its latest market briefing, Colliers reported that Metro Manila logged 446,100 square meters of transactions in the first half of the year, already exceeding half of 2024’s full-year total. The activity was largely driven by expansions and new setups, which accounted for 70 percent of deals, while relocations made up the balance.

The outsourcing sector remained a critical driver of demand, with more than 80 percent of third-party outsourcing transactions tied to business expansions. Shared services also recorded strong momentum, with over half of firms being new entrants to the local market. Colliers noted that small to mid-sized transactions dominated, with 56 percent of recorded deals involving spaces below 1,000 sqm.

Vacancy pressures easing

One of the clearer signals of recovery is the decline in space surrenders. Vacated office space in Metro Manila fell 27 percent to 382,000 sqm in the first half, compared with the previous semester. Of this, Philippine Offshore Gaming Operators (POGOs) accounted for 174,000 sqm, while non-POGO tenants made up 208,000 sqm.

Importantly, non-POGO vacancies have been steadily declining since 2023, reflecting greater lease renewals and a more stable tenant base. Colliers emphasized that POGOs now occupy less than 1 percent of total office stock, a fraction of their footprint during peak years.

Provincial hubs rising

Outside the capital, office demand reached 159,100 sqm in the first half of 2025, up 28 percent year-on-year. Cebu and Iloilo emerged as the strongest provincial markets, together accounting for more than half of regional transactions. Cebu’s vacancy rate dropped to 16.8 percent, its lowest since the pandemic, due to large-scale expansions by outsourcing firms.

Colliers also noted growing interest in emerging provincial cities, though supply constraints remain, with many locations lacking BPO-grade office stock. The consultancy suggested that developers consider strategic projects in these areas to capture future demand.

Cautious optimism for 2025

While challenges such as high vacancies in some submarkets, hybrid work uncertainty, and geopolitical headwinds remain, Colliers said market momentum is shifting in favor of growth.

“The Philippine office sector is no longer defined by vacancy shocks but by the steady expansion of traditional and outsourcing tenants,” the firm said. “Confidence is gradually returning, and with it, the foundations of the next cycle of growth.”