A nearly seven-year-old policy that froze new Philippine Economic Zone Authority (PEZA) ecozone approvals in Metro Manila may need to be revisited as compliant office space in key central business districts (CBDs) becomes increasingly scarce, according to property consultancy Colliers.

In a May 19 report titled “Metro Manila’s PEZA space constraint: Why it may be time to revisit AO 18,” Colliers Philippines director Kevin Jara and research manager Kath Taburada said the restrictions imposed under Administrative Order (AO) No. 18 are now constraining PEZA-registered firms that continue to prefer locating in established CBDs.

Issued in 2019, AO 18 suspended the processing and evaluation of new ecozones in Metro Manila in a bid to redirect investments to the countryside and promote more geographically inclusive growth.

However, Colliers noted that Metro Manila remains the primary gateway for companies entering or expanding in the Philippines, particularly information technology and business process management (IT-BPM) firms.

“As of the first quarter of 2026, about 70 percent of IT-BPM transactions were recorded in the capital, with the remaining 30 percent taking place in the provinces—more than half of which were concentrated in Iloilo and Cebu,” the report said.

For PEZA-registered firms, office location decisions are also tied to regulatory requirements because enterprises must operate within PEZA-accredited buildings to qualify for fiscal incentives.

Colliers said the constraint is becoming increasingly visible in the market.

In the first quarter of this year, Metro Manila had around 1.46 million square meters (sqm) of available PEZA space, equivalent to nearly half of the capital region’s total PEZA office stock.

However, only about 378,000 sqm are located within Makati City CBD, Ortigas CBD, and Fort Bonifacio in Taguig City, highlighting the limited supply of PEZA-compliant space in CBDs still preferred by many occupiers.

The report noted that the challenge becomes more pronounced for larger firms seeking contiguous office spaces.

“A typical 3PO [third-party outsourcing] requirement of around 1,500 sqm may still be accommodated in several locations. But larger occupiers seeking at least 5,000 sqm could face a much narrower set of viable options in their preferred districts,” Colliers said.

The property consultancy added that future office supply may further intensify the mismatch between demand and available compliant space.

Only 41 percent, or around 711,000 sqm, of Metro Manila’s upcoming office stock is PEZA-proclaimed, according to the report.

Colliers noted that Makati and Ortigas CBDs have no PEZA-proclaimed stock in the future pipeline, while Fort Bonifacio has only a limited share.

By contrast, future PEZA-compliant supply is concentrated in secondary CBDs such as Quezon City and Mandaluyong City.

“Unless the moratorium is revisited, the gap between where PEZA-registered occupiers want to locate and where compliant stock is being delivered is likely to widen further,” the report said.

Colliers said policymakers should consider recalibrating AO 18, especially under the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Law regime, which adopts a more targeted and performance-based approach to incentives.

“In our view, this raises the question of policy fit,” the report said.

“A broad geographic moratorium remains a blunt policy tool, particularly when market demand for PEZA-compliant space continues to cluster in established business districts in Metro Manila,” it added.

The report also noted that the restrictions may be limiting opportunities in other parts of Metro Manila beyond traditional CBDs, particularly in areas that still lack IT or ecozone developments but could otherwise attract investments and generate jobs.

Colliers added that even AO 11, issued in 2023, already introduced some flexibility by allowing certain Metro Manila ecozone applications that had secured pre-qualification before the moratorium to proceed.

If the current policy remains unchanged, the consultancy said occupiers may need to adopt more flexible site selection strategies, including evaluating submarkets with deeper PEZA inventory and pre-leasing upcoming compliant office spaces early.

Meanwhile, Colliers said landlords could benefit from refurbishing and repositioning aging PEZA-accredited buildings in primary CBDs to better capture demand from occupiers that still value established business addresses, accessibility, and regulatory compliance.