PNB Holdings expects 2026 profit to hold up

Despite office oversupply

MANILA, Philippines — PNB Holdings Corp. (PHC) is expecting earnings this year to at least hold near 2025 levels despite an oversupply of office space that continues to put pressure on rental rates and delay expansion decisions among tenants.

PHC chief financial officer Ponciano Carreon Jr. told The STAR that the company initially budgeted for stronger growth this year, but worsening economic uncertainty has tempered expectations for the commercial property market.

“Originally, our target for the year (is to grow) much better than the 2025 performance. But when the US-Iran broke out in February, we may not grow as much as we have wanted,” Carreon said.

Still, “the worst scenario may be flat (growth). We do not expect a high probability that we will be doing less than what we have done in the previous year.”

PHC booked a net income of P209.9 million in the first half, up by 85.3 percent from a year earlier, while revenue climbed by 26 percent to P634.3 million. In 2025, full-year net income fell by 24 percent to P401.68 million as revenue declined by nine percent to P1.21 billion.

Carreon said office demand has softened as companies take longer to decide on expansions, while abundant available space has strengthened tenants’ bargaining power.

He estimated that office space in the Bay Area in Pasay is about 60 percent occupied, leaving roughly 40 percent vacant. PHC’s properties in the area were performing better, with occupancy at around 80 percent as of July.

Metro Manila office vacancy, meanwhile, was estimated at around 20 percent, representing millions of square meters of available space.

PHC is responding by adjusting the mix and use of its existing properties rather than relying solely on traditional offices. Carreon said the company is incorporating flexible workspaces, retail, food and beverage outlets, event spaces and other amenities as occupier preferences change.

The challenging market is also shaping the timing of PHC’s larger redevelopment plans, with the company reluctant to add substantial new supply before demand improves.

Among PHC’s properties, Carreon said the Buendia-Paseo site in Makati remains the most logical candidate for the company’s first major redevelopment because it currently produces the lowest return.

The roughly 8,000-square-meter site is largely used for parking and generates only a few million pesos in revenue, compared with the recurring income generated by the PNB Makati Center and PNB Financial Center.

“The most logical property to touch will be the lowest yielding asset. That will be Buendia,” Carreon said.

PHC’s plans for the property are already at an advanced stage, but Carreon said management would wait for clearer signs of a property market recovery before committing to construction.

“We will groundbreak when we believe the market is ready for it,” he said, adding that a launch could be possible as early as next year if conditions improve, although 2028 or 2029 also remain possible depending on the market.

Once developed, the Buendia-Paseo property could accommodate between 100,000 and nearly 200,000 square meters of floor area, significantly expanding the income-generating space on the site.

Carreon said PHC has yet to fix the project’s investment cost, but the redevelopment would require a multi-billion-peso capital expenditure.