Cebu office vacancy hits 17% as impact of POGO exit lingers

CEBU, Philippines — Cebu’s office market is grappling with elevated vacancy levels as weak demand in secondary locations and the lingering impact of former Philippine offshore gaming operator (POGO) tenants continue to weigh on the province’s commercial property sector.

Office vacancies in Metro Cebu stood at about 17 percent as of the second quarter of 2026, significantly higher than the single-digit vacancies seen in the region’s premier business districts, according to Colliers Philippines’ latest market study.

The vacancy rate masks a two-speed market. Prime office hubs such as Cebu IT Park and Cebu Business Park continue to post relatively healthy occupancy levels, benefiting from steady demand from business process outsourcing (BPO) firms and shared services companies.

However, other office submarkets in Cebu have been recording substantially higher vacancies, pulling up the overall rate.

“The story in Cebu is similar to Metro Manila,” said Joey Roi Bondoc, Head of Research at Colliers Philippines. “While prime business districts are performing well, elevated vacancies in other locations are skewing the overall market picture.”

In Metro Manila, office vacancies have remained high largely because of empty spaces in the Bay Area and fringe locations of Makati that previously depended heavily on POGO tenants.

A similar dynamic is playing out in Cebu, where certain office buildings that once housed gaming firms have struggled to replace departing occupiers.

One building formerly occupied by POGOs was eventually able to fill its space through an English as a Second Language (ESL) company, reflecting the uneven recovery across the market.

Despite the elevated vacancy rate, demand for office space in Cebu remains resilient. The city continues to attract outsourcing firms due to its large pool of skilled workers and its status as the country’s biggest office market outside Metro Manila.

Higher-value outsourcing companies, including shared services and captive firms such as Accenture, Wells Fargo and EY, maintain a significant presence in Cebu. These companies provide financial, software engineering, research and artificial intelligence support to global affiliates, generating more sophisticated and higher-paying jobs than traditional back-office operations.

“Cebu remains highly competitive because of its manpower base,” Bondoc said, noting that the province remains among the top locations on the radar of BPO firms looking to expand outside Metro Manila.

Cebu typically records around 100,000 square meters of office transactions annually, a level that industry executives still consider robust despite softer market conditions.

Developers also remain bullish on the sector. New office projects from developers such as Ayala Land and Rockwell Land are scheduled for completion between 2027 and 2028, adding fresh supply to accommodate future demand from BPO companies, retail firms, ESL providers and government agencies.

The near-term challenge, however, is balancing new supply with demand growth.

While Cebu’s vacancy rate remains elevated, industry observers say the market’s long-term fundamentals remain intact, supported by a young labor force, an expanding outsourcing industry and the continued influx of higher-value multinational occupiers.

For now, Cebu’s office market reflects a tale of two cities: thriving prime districts that continue to attract global firms and struggling secondary locations still searching for tenants in a post-POGO landscape, Bondoc said.