Metro Manila office market shows strong 2025 performance

The Metro Manila’s office market delivered sustained positive leasing activity, with Q4 2025 volumes reaching 209,900 sqm. Despite the quarterly decline, annual gross leasing volume closed strong at roughly 1 million square meters. This marked the highest leasing volumes since 2022, maintaining the upward demand trajectory. Consistent demand from the BPO sector, corporate occupiers, and government agencies supported this robust leasing activity over several quarters. Bonifacio Global City and Makati CBD drove this performance, recording 171,200 and 129,600 sqm of transactions, respectively in 2025. We anticipate leasing volumes will remain solid in 2026, hovering around the 1 million square meter mark by end of the year. This is supported by sustained interest from the core demand drivers moving forward. 

BPO companies continued to lead the market demand in 2025, representing roughly 64% of leasing distribution across Metro Manila, with corporate occupiers making up the rest. While market uncertainties persist, the BPO sector's continued expansion positions it as the primary driver of the office market demand.

Overall vacancy rates reached 18.6%, exceeding the previous quarter’s vacancy rate primarily due to recently completed projects having lower pre-commitment levels. Makati CBD and Bonifacio Global City posted moderate vacancies, ending the year at 12.1% and 9.2% respectively. Vacancy rates are anticipated to increase in 2026 with around 583,000 sqm of new inventory entering the market, most with minimal pre-committed spaces.

Rental rates posted modest gains, increasing by 1.3% from the previous quarter and 0.03% year-on-year to PHP987 per square meter per month. This positive quarterly rental growth is the first recovery since 2022, buoyed by solid leasing volumes during the year. Despite this improvement, the market remains tenant favourable. Our outlook projects rental rate will soften again in the short term as substantial new supply enters the market, heightening competition and creating additional tenant alternatives. BGC rental rates remained the market's highest at PHP1,331 per square meter per month despite quarterly moderation, anchored by solid leasing fundamentals and maintained single-digit vacancy at 9.2%.

New office supply in the Metro Manila is anticipated to reach approximately 2 million sqm between 2026 and 2030. Supply deliveries will peak in 2026 (583,000 sqm) and 2029 (362,000 sqm). This significant volume of incoming stock will likely intensify market competition, keeping vacancies elevated while creating downward rental pressure. The bulk of future supply will emerge in Makati City, where bank headquarters construction will deliver roughly 492,000 sqm of new office space. An additional 536,000 sqm of unscheduled supply remains in the pipeline, with delivery timelines to be determined pending formal project announcements.

Overall, the Metro Manila office sector performed strongly in 2025. However, looking ahead, we remain cautiously optimistic as supply continues to outpace demand, which may dampen short-term market performance. Nonetheless, medium to long term economic growth expectations for Asia point towards continued positive trajectory for the Manila’s office market.