Energy crisis threatens Philippine office demand—Colliers
Published Apr 17, 2026 01:22 pm
Rising global energy prices driven by Middle East tensions are posing growing risks to the Philippine office real estate sector, as higher power costs threaten tenant demand, rental growth, and asset values, according to property consultancy Colliers.
In an April 16 report, Colliers Philippines director Daniel Salapong said the Philippines’ heavy reliance on imported oil—accounting for over 90 percent of supply—has left office developments highly exposed to global price shocks, with electricity costs rising as geopolitical disruptions push up fuel prices for power generation.
This, in turn, is increasing operating expenses (opex) for landlords, including higher common area maintenance (CAM) charges, while squeezing margins as building owners are often forced to absorb part of the cost increases to retain tenants, Colliers said.
Energy-driven cost pressures are also weighing on occupiers, particularly firms in the information technology and business process management (IT-BPM) and professional services sectors, which may respond by downsizing office space, relocating to lower-cost areas, or accelerating hybrid work arrangements, it added.
Colliers also flagged rising investment risks, noting that buildings with high energy consumption or outdated systems could face faster obsolescence, while developments with renewable energy (RE) integration and more resilient power systems are starting to command higher valuations. This is creating a widening gap between so-called “future-ready” buildings and traditional office assets, the consultancy said.
The report noted that energy volatility should now be treated as a structural challenge rather than a temporary disruption, as recurring geopolitical tensions continue to affect global oil supply routes, insurance costs, and inflation. As a result, office developers and investors are being pushed to incorporate energy security, independence from centralized grids, and long-term cost predictability into project planning.
Among the solutions identified in the report is the adoption of off-grid or hybrid energy systems at the building or district level. These typically combine solar photovoltaic panels, battery energy storage, backup generation, and smart energy management systems, which can help stabilize operating costs, reduce exposure to price spikes, and ensure business continuity during outages.
Colliers added that buildings capable of partially operating the grid during peak pricing periods may gain a competitive edge, particularly among multinational tenants that prioritize energy resilience and sustainability in location decisions.
The report also highlighted the potential role of waste-to-energy (WtE) technologies as a supplemental power source, noting that current environmental regulations—particularly the Clean Air Act of 1999—limit the adoption of such systems despite advances in emissions control. A reassessment of these policies, the report said, could help address both energy security and urban waste management challenges.
For Colliers, addressing energy risks will require coordinated action from policymakers, developers, and investors, including incentives for decentralized energy systems, retrofitting of existing buildings, and greater integration of energy considerations into asset valuation and leasing decisions.