Metro Manila office vacancy rate back to single digit in 2026 – CBRE

MANILA, Philippines —  Office space vacancy in the Metro Manila market is seen to remain double-digit until 2026,  with more jobs in the information technology-business process management sector seen to be created in the countryside.

Based on CBRE Philippines ‘Start of Year Market Report, Metro Manila office vacancy registered at 20.4 percent in the first quarter of the year.

In a recent forum, CBRE Advisory and  Transactions country head Jie Espinosa said they expect Metro Manila office vacancy to return to the single-digit level of 5.4 percent in 2026, considering the 2028 roadmap of IT and Business Process Association of the Philippines (IBPAP).

“Given the roadmap that the IBPAP has forged, and you know (depending on) how we see different sectors in the market panning out, it will take us roughly around until 2026 to get to pre pandemic numbers, single digit vacancy all over again. This assumption is based on an around eight percent increase in terms of FTE (full time employees) year on year for IBPAP,” Espinosa said.

Under the roadmap, the IT-BPM industry – a  key driver of office space demand – is seen to create 1.1 million new FTEs  by 2028, 54 percent of which are in the countryside.

Figures from CBRE showed that the IT-BPM industry accounted for 58 percent of the 163,100 sqm of office space demand in the first quarter of the year.

If the 2028 targets of the roadmap are achieved, the country’s IT-BPM industry will have a total of 2.5 million FTEs by 2028, 40 percent of which will be in the countryside. This is the larger percentage compared to the 29 percent countryside ratio as of end-2021.

“The assumption here is that there’ll be around 200,000 square meters of vacated spaces in the market (every year). So if all of those assumptions hold true we could see single digit vacancy numbers again by 2026,” Espinosa said.

For this year, CBRE forecasts Metro Manila office vacancy to register at 16.7 percent.

This is projected  to slightly decline to 13.7 percent in 2024, and further down to 11.1 percent in 2025.

Espinosa said the current 20.4 percent Metro Manila office vacancy translates to around 1.75 million square meters of Grade A, B and prime office space.

“I think the most salient observation that you can pick up from it is that out of that 1.75 million square meters out there, every time we speak with new clients every time new entrants come in, new BPO companies inquiring about space in the Philippines, we tell them that more than half of what’s available out there are vacated spaces,” Espinosa said.

“These are spaces that were handed back. These were spaces that were a result of the Chinese online gaming companies leaving behind those spaces and some of the existing occupiers here recalibrating their space takeup and renegotiating their leases,”he said.

The Bay area currently accounted for 23 percent of the available office space in Metro Manila at 407,200 sqm.

This was followed by Makati with 361,200 sqm, and Quezon City with 290,200 sqm of available office space.

For this year, CBRE said 508,000 sqm of new office space is expected to be added to Metro Manila’s office supply.

This is lower than the original forecast of 556,000 sqm as the completion of 48,000 sqm worth of office space was pushed back to 2024.

CBRE data showed that a total of 282,600 sqm of new office space is forecast to be added to Metro Manila’s office supply in 2024, and 391,500 sqm in 2025.

A total of 144,200 sqm of new office space is projected to be completed in 2026, according to the real estate services firm.