Rising energy prices triggered by the Middle East conflict are placing financial pressure across the Philippine office sector, with costs ultimately shared among landlords, occupiers, and the broader market, according to property consultancy Colliers.

In a report on Monday, April 20, Colliers Philippines negotiator Kayla Gelilang and research manager Kath Taburada said the current environment is forcing the sector to confront a key issue: how rising energy costs are absorbed across the market.

Colliers said the impact is not borne by a single group but is distributed across stakeholders, with timing and intensity varying over different phases. In the near term, the property consultancy noted that landlords are the first to feel the pressure as higher fuel prices push up electricity and operating costs for office buildings, including common use service area (CUSA), cooling systems, elevators, and backup generators.

While these costs are typically passed on through CUSA charges, Colliers said recovery remains constrained by lease structures and market conditions. As a result, landlords are likely absorbing part of the increase, leading to margin compression. The firm added that there is currently no immediate indication of widespread increases in common area charges among major office developers, reinforcing the view that building owners are shouldering part of the burden.

To manage rising expenses, Colliers said landlords are adopting energy conservation measures such as reducing lighting in non-critical areas, limiting the use of non-essential equipment, and controlling air-conditioning usage. The report added that some developers are also shifting to renewable energy (RE) sources to stabilize long-term operating costs and reduce exposure to fuel price volatility.

For occupiers, Colliers said the impact is more indirect but still significant. Higher fuel prices are raising logistics and commuting costs, while inflation and peso depreciation are eroding purchasing power and increasing the cost of imported equipment and office fit-outs. These pressures, according to the report, are prompting companies to reassess expansion plans and increasingly favor flexible, ready-to-use office spaces to manage capital expenditures (capex).

Colliers added that over time, sustained increases in transportation costs and mobility challenges could dampen office space demand as firms rethink location strategies and workplace arrangements, particularly in balancing cost efficiency with employee accessibility and retention.

The report also highlighted the Philippines’ vulnerability to global energy shocks, noting that more than 95 percent of its oil imports come from the Persian Gulf, amplifying the impact of supply disruptions on domestic costs.

In the medium to long term, Colliers said the distribution of costs is expected to evolve, with landlords prioritizing efficiency improvements and RE adoption, while occupiers increasingly focus on predictable costs and operational resilience. These shifts, the report said, are likely to influence leasing decisions, development strategies, and overall office market dynamics.

Colliers added that energy performance is becoming a key factor shaping demand and investment decisions, signaling a structural shift in how the office sector responds to sustained energy volatility.