Property consultancy Colliers projects that Makati central business district (CBD) may shift to a landlord’s market as early as next year, due to limited new supply over the next two years.
“Makati CBD is poised to enter a landlord’s market as early as 2026, assuming it sustains the strong performance observed in the first quarter of 2025,” said Kath Taburada, senior market analyst, Office Services- Tenant Representation at Colliers, in an interview on Wednesday.
According to Taburada, Makati CBD’s vacancy rate as of first quarter was 7.2 percent.
If Makati CBD’s current market condition persists, Colliers said vacancy is projected to reach 6.9 percent by the end of 2025 and 5.5 percent in 2026.
Citing Colliers figures, Taburada said Makati CBD’s total stock is currently at 3.4 million square meters (sq.m.).
She said in 2025, about 23,000 sq.m. of new office space will be completed while no new office buildings anticipated in 2026. She noted, however, these new office developments are not expected to substantially increase Makati CBD’s office stock.
In a report, Colliers said several major banks are developing new headquarters in the CBD but most of these are expected to be completed 2029 onwards.
Unless a substantial portion of space in these headquarters is made available for lease to the market, Colliers fears the duration of a potential landlord’s market may be protracted.
Taburada said Colliers expects office rents in Makati CBD to increase if the downward trend in vacancy continues.
“However, rents are still case-to-case scenarios as these depend on a variety of factors such as building age, occupancy of the building, landlord’s portfolio vacancy and size of requirement,” she said.
Taburada said with limited office projects in the pipeline in the next three years and dwindling available space, occupiers may find it increasingly challenging to secure office spaces — especially those with large space requirements.
“This shift is also expected to result in reduced flexibility on rents and concessions from landlords,” she added.
Redevelopment needed
Colliers said in the report with office availability dwindling and many existing buildings aging, redevelopment is becoming increasingly imperative to meet evolving demands.
With this challenge, Colliers sees the need to develop the Makati CBD.
In the report, Colliers said the proposed zoning amendments of the Makati Central Estate Association (MACEA) Inc. could drive Makati CBD’s redevelopment.
MACEA’s proposed changes include increasing the allowable floor area ratios for office developments in Legazpi and Salcedo Villages, as well as permitting mixed-use developments along major thoroughfares.
In support of this, Colliers also urges the government to pass the Condominium Redevelopment Act, as the legislation would complement the proposed zoning updates.
Colliers also recommends granting incentives to redevelopment projects, particularly those that integrate sustainability, future-proof the CBD.
Benefits to occupiers
Colliers encourages occupiers to take advantage of favorable conditions by exploring new office space options and securing competitive lease terms.
It said companies implementing return-to-office (RTO) strategies can also adapt a “flight to value” strategy as a wide selection of quality office spaces is now available at lower rental rates.
Colliers also encourages tenants to consider pre-leasing upcoming office buildings as landlords remain flexible with commercial terms.
“Early commitments can offer a first-mover advantage, allowing tenants to lock in favorable rates, secure prime locations, and customize space to meet evolving workplace needs,” it said.
Strike a balance
Landlords with older office properties should remain competitive in their offerings, Colliers said.
But it urged landlords to strike a balance in maximizing value with maintaining occupancy.
“While pushing for higher short-term rents may be appealing, it risks prolonged vacancies and increased operational costs,” the report said.
Instead, Colliers said landlords should consider offering flexible lease terms, tenant incentives, and timely refurbishments to drive long-term stability, steady cash flow, and improved property value.
