Office market off to good start in 2025

Despite POGO exit

MANILA, Philippines — The Philippine office market is off to a promising start this year despite the absence of Philippine offshore gaming operators (POGOs) and demand from government-related deals, according to real estate brokerage firm Leechiu Property Consultants.

LPC said the country’s office market in the first quarter posted a seven-percent increase in year-on-year demand of 355,000 square meters.

The growth was driven by the IT-business process management sector (IT-BPM), predominantly from global in-house centers, which continue to view the Philippines as a strategic outsourcing destination.

LPC said that notable sub-sectors include companies that are in the health care and financial industries.

“The office market in the Philippines continues to show grit in the face of global and local challenges. The IT-BPM sector remains to be a reliable key driver of growth, while traditional office tenants are also increasingly active,” LPC director of commercial leasing Mikko Barranda said.

Nationwide office vacancy rate was at 17 percent in the first quarter, a slight improvement from the previous quarter’s 18 percent.

While vacancy remains in double digits, LPC said that the decline reflects a gradual recovery, driven by sustained demand and a slowdown in space contractions.

LPC expects vacancy to trend further downward in the coming quarters, particularly in core central business districts such as Makati and BGC, as active leasing requirements begin to convert into signed deals.

Overall, LPC is projecting the country’s office market to achieve a net take-up of 490,000 square meters by the end of 2025, representing a 16-percent year-on-year increase.

The growth, it said, would be fueled by strong leasing activity particularly from the IT-BPM sector as well as a continued slowdown in space contractions – largely due to the tapering of POGO exits that had previously dampened market performance.

“With a promising outlook for the rest of the year, we expect resiliency amid potential headwinds,” Barranda said.