The Philippine office leasing market saw a four percent improvement in demand to 1.1 million square meters (sqm) this year from 1.07 million sqm in 2023 but demand and supply will not be balanced until 2027.

In a media briefing, Leechiu Property Consultants Director for Commercial Leasing Mikko Barranda said the government and traditional industry spearheaded demand for office space in 2024 as the ban on Philippine offshore gaming operators (POGO) resulted in vacancies.

“Government demand for office spaces increased sixfold over the past year, marking a significant milestone in 2024... it is the highest it has been in seven years” said Barranda. Government demand is mostly large-scaled, motivated by their relocation and expansion.

Government accounted for 11 percent or 122,000 sqm of demand while traditional offices took the biggest share of 44 percent, growing 13 percent to 492,000 sqm. The IT-BPM sector accounted for 38 percent or 422,000 sqm.

During the year, transactions above 1,000 sqm represent 75 percent of overall demand with a majority of tenants preferring buildings that are 10 years old and below. All industries have favored Grade B buildings.

For Metro Manila, the Bay Area saw the largest demand of 24 percent or 213,000 sqm of which the government accounted for 38 percent. This was followed by Makati with 22 percent or 198,000 sqm with 68 percent coming from traditional sector while the Ortigas, Mandaluyong, San Juan area accouint fro 17 percent or 152,000 sqm.

Outside of Metro Manila, Cebu remains the top-performing district with a lion’s share of 49 percent or 113,000 sqm of which 72 percent is from the IT-BPM sector. This was followed by Clark, Pampanga with 15 percent or 35,000 sqm and Iloilo with eight percent or 19,000 sqm.

For 2025, LPC forecasts live demand of 494,000 sqm of which 51 percent or 266,000 sqm will come from the IT-BPM industry while the traditional sector will account for 49 percent (45 percent government).

The highest demand will be for Metro Manila (63 percent) or which Bonifacio Global City will have a 24 percent share, followed by Quezon City (13 percent), and Makati (10 percent).

“In the next six years, vacancy is forecast to be a seven percent, reaching pre-pandemic levels,” said Barrameda.

He noted that “since 2021, demand has been steadily increasing, and vacancy rates have consistently declined. This trend suggests that the market is moving toward equilibrium, with a potential stabilization anticipated by 2027.”