Manila office vacancy hits 18% amidst supply surge

Achievable rents for new leases and renewals currently sit 15 to 20 percent below headline rates in fringe areas.

Metro Manila’s office sector is entering 2026 with a widening divide between prime business districts and weaker secondary locations as landlords and tenants compete for leverage in an uneven leasing environment.

Reichelle Engwa, Director & Hub Lead for Philippines and APAC Tenant Representation at Cushman & Wakefield, said the sector remains in “a phase of adjustment” rather than clearly favouring either landlords or tenants, despite vacancy reaching about 18% at the end of 2025.

Stronger demand in Makati, Bonifacio Global City, and Ortigas is reducing tenant leverage in Grade A buildings, whilst fringe districts still face elevated vacancy and more aggressive rent negotiations.

“Hybrid work has really changed how occupiers think about their offices,” Engwa said. “They are taking on less space overall.”

Engwa described Metro Manila as a “two-speed market,” with prime CBDs nearing single-digit vacancy levels whilst secondary districts continue pulling overall vacancy upward.

“In contrast, the fringe areas and secondary business districts are pulling overall vacancies upward,” she said.

Incoming office supply over the next two years is expected to keep vacancy elevated outside prime districts, particularly in newer secondary office corridors.

Landlords in weaker submarkets are becoming more flexible during lease negotiations.

“Achievable rents are as much as 15 to 20% below headline rents for renewals and new leases,” Engwa said.

Cushman & Wakefield said landlords are offering longer fit-out periods, flexible lease structures, and rental incentives to retain occupiers and compete with newer developments.

Older buildings face growing pressure from Grade A offices offering better amenities, stronger sustainability credentials, and future-ready specifications.

Tenants hold stronger negotiating leverage in Quezon City, Parañaque, Alabang, and fringe districts where vacancy remains high.

However, Engwa said outcomes still depend on timing, landlord flexibility, and building quality.

“So we're currently advising many occupiers on a stay-versus-go strategy,” she said.

Engwa advised that companies entering lease negotiations 12 to 18 months before expiry are better positioned to secure stronger terms.