Metro Manila’s office market lost momentum in the second quarter as the prolonged war in the Middle East prompted companies to postpone expansion plans and delay leasing decisions, prompting property consultancy Colliers Philippines to lower its full-year net take-up forecast despite signs of resilience in the real estate sector.

In its Q2 2026 Metro Manila Office Report published last Wednesday, Aug. 5, Colliers said net office take-up reached 90,000 square meters (sqm) in the first half of 2026 as occupiers deferred leasing commitments amid geopolitical uncertainty. As a result, the property consultancy lowered its full-year net take-up forecast to 300,000 sqm from its earlier projection, while expecting demand to gradually recover as additional Philippine Economic Zone Authority (PEZA)-accredited office space becomes available and deferred leasing requirements resume.

Leasing transactions in the second quarter fell 24 percent from the previous quarter to 145,000 sqm as companies delayed decisions to the second half of 2026 and even 2027, reassessed capital expenditure (capex) plans, and opted to renew existing leases instead of taking up new office space.

“Local and global headwinds have slowed leasing decisions, but we are in a far better position than during [the] Covid-19 [pandemic], when lease cancellations and non-renewals were widespread. Bright spots have also emerged: Administrative Order (AO) No. 45 reopens PEZA accreditation in Metro Manila, while flex net take-up has doubled year-on-year,” Colliers office services-tenant representation director Kevin Jara said.

Despite the slower leasing activity, Colliers noted that the market remained relatively stable, with Metro Manila’s office vacancy rate improving to 19 percent in the first half from 20 percent a year ago. Rental rates also remained broadly flat across major business districts, including Makati City central business district (CBD), Bonifacio Global City (BGC), and Ortigas CBD. The consultancy expects vacancy to end the year at 19.3 percent while rents remain stable.

One of the strongest performers during the period was the flexible workspace segment, with net take-up doubling year-on-year to 6,000 seats from 3,000 seats a year ago. Flexible workspace operators also accounted for about 30,000 sqm of traditional office transactions as companies increasingly favored scalable office arrangements over long-term lease commitments amid continued uncertainty.

Colliers also sees AO 45 as a key catalyst for the office sector’s recovery. AO 45 exempts Metro Manila information technology (IT) parks and centers from the moratorium on new PEZA ecozone applications, potentially expanding the supply of PEZA-accredited office space and encouraging IT and business process management (IT-BPM) firms to proceed with previously deferred expansion plans.

As of the first half of 2026, Metro Manila had about 7.9 million sqm of PEZA-accredited office stock, with around 1.46 million sqm available for lease. Colliers estimates that another 681,000 sqm currently undergoing PEZA processing could immediately be added to the market if approved, while about 1.2 million sqm of new PEZA-accredited office space could enter the market through 2030.

The property consultancy likewise said sustainability has become an increasingly important consideration for occupiers. Green-certified buildings accounted for 228,000 sqm, or 68 percent, of all office transactions in the first half, compared with 102,000 sqm for non-green buildings. Colliers expects certified office stock to expand from about six million sqm this year to 7.1 million sqm by 2030, increasing the share of green buildings in Metro Manila’s office inventory from 39 percent to 43 percent.

To navigate the evolving market, Colliers recommended that occupiers begin lease renewal negotiations 18 to 24 months before contract expiry, particularly as more PEZA-accredited office inventory becomes available. It also encouraged businesses to consider flexible workspace and managed office solutions to reduce capital outlay, while urging landlords to invest in sustainability upgrades, renewable energy (RE), and internationally recognized green certifications to remain competitive. The consultancy further advised occupiers to prioritize transit-oriented developments (TODs) as improving transport connectivity is expected to support office demand and employee retention over the medium term.