Manila to face absorption challenges in the office market

There is 159,000sqm of supply pipeline this year.

The Manila office sector is seen to remain stable according to a JLL report, with BPO and traditional occupiers driving leasing activity. However, the 159,000 sqm pipeline supply in 2025 presents absorption challenges, likely requiring more tenant-friendly rates in an increasingly competitive landscape.

“Rents may experience downward pressure as new supply enters the market, though premium buildings are expected to remain stable. Capital values will likely remain resilient with potential for growth as interest rates normalise,” the report said.

Here’s more from JLL:

The office sector achieved around 88,200 sqm of positive net absorption in Q2 2025, bolstered by significant transactions. Taguig City captured notable deals, including a 3,500 sqm BPO commitment and a 2,000 sqm financial services lease.

Meanwhile, Makati City contributed with a 1,700 sqm BPO transaction. Some rightsizing occurred as two BPO operators vacated space (1,800 sqm in Taguig City and 3,500 sqm in Makati City), as some firms continue to optimise office spaces.

Vacancy rates improve as developers pause completions, though significant pipeline supply remains

No new completions in Q2 as developments like Altaire and Gentry Corporate Plaza shifted timelines from Q3 2025 to early 2026. The development pipeline remains substantial, with approximately 159,000 sqm of new office space expected to enter the market by year-end 2025.

Vacancy fell to 14.5% in Q2 2025, decreasing 181.3 bps q-o-q due to steady move-ins across Makati and Taguig alongside the absence of new supply. However, vacancy may face pressure as developers deliver the scheduled 159,000 sqm through the remainder of 2025.

Rents stabilise while capital values show modest growth

Rents remained steady at PHP 1,103.6 per sqm, per month in Q2 2025, as landlords maintained current rates to attract tenants and keep demand afloat.

Capital values increased slightly by 0.4% to PHP 187,203 per sqm in Q2 2025, indicating continued investment market stability and gradually returning investor confidence.