Leechiu Property Consultants (LPC) projects net takeup of the Philippine office market will increase by 16 percent year-on year to 490,000 square meters (sq.m.) by the end of 2025 from 422,000 sq.m. in 2024.
LPC said in a report released April 8 said this year’s growth will be fueled by strong leasing activity, particularly from the information technology-business process management (IT-BPM) sector, and a continued slowdown in space contractions—largely due to the tapering of the exit of the companies in Philippine offshore gaming operations (POGO) that had previously dampened market performance.
“The office market in the Philippines continues to show grit in the face of global and local challenges. The IT-BPM sector remains to be a reliable key driver of growth, while traditional office tenants are also increasingly active. With a promising outlook for the rest of the year, we expect resiliency amidst potential headwinds,” said Mikko Barranda, LPC director for commercial leasing.
In the report, LPC said the office property market was off to a good start this year, registering a 7-percent year-on-year increase in demand in the first quarter at 355,000 sq.m. from 331,000 sq.m.
LPC said demand was driven by the IT-BPM sector, predominantly from global in-house centers (GICs). The IT Business Process Association of the Philippines defines GICs as service delivery operations owned and operated by the same company that uses their service.
“The IT-BPM sector, predominantly GICs, continue to view the Philippines as a strategic outsourcing destination. Notable sub-sectors include companies that are in the healthcare and financial industries,” LPC said in the report.
Barranda said in a press briefing also on April 8 demand for more office space for US companies in need of in-house back office work of GICs is increasing.
Barranda cited financial services company JP Morgan which has almost doubled its real estate footprint in Bonifacio Global City (BGC).
The report added the number of vacant spaces in Metro Manila has declined from 312,000 sq.m. to 277,000 sq.m. as POGO exits operation taper off.
“We expect contractions to ease further in the coming quarters,” Barranda said.
In the report, LPC said Metro Manila led leasing activity during the quarter with the Ortigas/Mandaluyong/San Juan area recording the highest number of lease transactions, totaling 59,000 sq.m., reflecting growing interest in emerging submarkets offering competitive rental rates.
LPC said BGC absorbed 51,000 sq.m., equivalent to 40 percent of its total demand from 2024 of 126,000 sq.m. within the first quarter of 2025 alone.
LPC said nationwide, office vacancy rate held steady at 17 percent in the first quarter of 2025, a slight improvement from the previous quarter’s 18 percent.
Vacancy is expected to trend further downward in the coming quarters, particularly in core central business districts such as Makati and BGC, as active leasing requirements begin to convert into signed deals.
“While vacancy remains in double digits, the decline reflects a gradual recovery, driven by sustained demand and a slowdown in space contractions,” Barranda said.
He said the current uncertainty in the global economy could prove beneficial for the office space segment of the real estate industry as outsourcing becomes more important for multinational companies.
“When things in the US become very difficult, it seems like there’s some correlation of more offshore outsourcing work,” Barranda said.
