Metro Manila Office Demand Hits Five Year Low Despite Lower Vacancy

Metro Manila's office market sent a mixed second-quarter signal as demand weakened to a five-year low while vacancy still improved because completions slowed.

Headline Demand Overstates The Quarter

CBRE reported 161,160 square metres of office transactions in Q2, but real demand excluding pre-leasing and developer take-up was only 111,100 square metres. That made the quarter the thinnest in five years by the adjusted measure.

Completions Are Holding Vacancy Down

Vacancy improved slightly even as demand worsened because developers have been holding back projects and new completions dried up. That means lower vacancy is not automatically a sign of stronger tenant expansion.

Taguig And Makati Need Separate Reading

Large occupiers still compare BGC, Makati, Ortigas and Bay Area locations by rent, incentives, floor plate and employee access. A national or Metro Manila average can hide weak leasing depth in specific buildings.

Buyer Checks

Investors should review lease expiries, incentives, fit-out costs, tenant sector, PEZA status, transport access and competing supply. Residential buyers near office districts should watch whether employment nodes are actually expanding.

Outlook

Metro Manila landlords may gain from limited new completions, but tenant demand is not broad enough to justify aggressive rent assumptions. Buildings with efficient floor plates and realistic incentives should outperform older secondary stock. BGC and Makati owners should track signed expansions, not only enquiries.

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