Office vacancy rates are expected to further increase through 2025 despite strong leasing activity and positive take-up in key Metro Manila districts, as companies continue to right-size their footprints, according to market research firm JLL Philippines.
JLL Philippines head of research and consulting Janlo de los Reyes said vacancy rate in the Metro Manila office market reached 19.6 percent as of end-2024, with projections indicating that it would rise to more than 20 percent by end-2025.
“We’re still seeing a lot of movement in these districts, despite strong demand. The number of pull-outs, combined with slower take-up in the fourth quarter of 2024, will likely push vacancy levels even higher,” de los Reyes said in a briefing Tuesday.
JLL reported that 407,000 square meters of office space were vacated in 2024, as occupiers continued to adjust their space requirements and evaluate their long-term strategies, especially under the continuing trend of hybrid work arrangements.
A 19,000-square-meter pull-out by an internet gaming licensee in Paranaque and a 1,600-square-meter exit by a corporate occupier in Taguig contributed to the shift.
The Bonifacio Global City (BGC), along with Makati and Quezon City, saw the majority of the 407,000 square meters of vacated space, with the combined total for these districts accounting for around 58.9 percent of all released spaces in 2024.
The BPO sector, which still accounts for a significant portion of office space demand, remained the largest source of both take-up and vacancy due to evolving work patterns and economic conditions.
Despite these pull-outs, key districts such as BGC and the Makati CBD continue to lead in terms of demand.
“Bonifacio Global City has been performing quite well with vacancy levels under single digits since the first quarter of 2024. We’re still seeing significant interest in this district as it continues to be a preferred location for occupiers, especially with the ongoing ‘flight to quality’ from older buildings into newer ones,” de los Reyes said.
He said, however, that even in the high-demand areas, vacancy rates continued to rise due to slower leasing activity in the fourth quarter of 2024, which only saw 70,000 square meters of space taken up.
De los Reyes said that while interest remains strong in certain locations, the market is still grappling with oversupply and elevated vacancy levels, which would continue to put pressure on rental rates through 2025.
Rental rates across Metro Manila largely plateaued at P982 per square meter per month in 2024, with a marginal decline expected as prolonged vacancies in older office buildings drive landlords to adjust their asking rents to attract tenants.
JLL projects that rental rates would continue to decrease slightly, ranging between P950 to P960 per square meter per month as more office spaces with low pre-commitment levels enter the market.
“We’re still seeing a lot of competition for tenants, particularly from older buildings that have been vacant for a while. As a result, we’re seeing landlords lower rental rates to attract new tenants, and that trend is expected to continue in the coming year,” de los Reyes said.
