Metro Manila office completions pile up as vacancy risks rise

Traders Union
All News
Business & Wealth
Metro Manila office vacancy risks

Highlights

Metro Manila faces a supply surge as 231,600 square meters of Grade A office space, about 2.3% of existing stock, will be delivered in Q4 2024.
Overall vacancy rises to 19.2% in Q3 from 18.9% prior, with Grade A office net take-up turning negative at 23,900 square meters and vacancy projected to surpass 20% by year-end.
Makati CBD, Quezon City, and Bay Area face the highest vacancy pressures—potentially reaching 23%, 26%, and 36% respectively by end-2024—despite average rents in Metro Manila rising 0.5% to P861.10 per sqm per month.

Fourth-quarter supply surge builds market pressure

As reported by BusinessWorld Online, property consultancy Savills Philippines says only 16,900 square meters, or about 9% of the 183,400 square meters of Grade A office space expected for delivery in the third quarter, is completed during the period.

Three major developments, Yuchengco Centre, Offices at the Galleon, and SM North EDSA Tower 5, are moved to the fourth quarter, adding to a larger concentration of office supply due before year-end. Including Southfield Center and Spectrum, about 231,600 square meters of new office space is now scheduled for fourth-quarter delivery, equivalent to roughly 70% of the 329,800 square meters in total office completions projected for 2026.

Savills does not specify the reasons for the timetable changes. The consultancy says the 231,600 square meters due in the fourth quarter is equal to about 2.3% of the market's existing stock, and that any increase in vacancy will depend partly on current pre-leasing levels, with the biggest pressure expected in districts facing substantial new supply.

District vacancies and rents show mixed trends

Market conditions are weakening at the metro level as Grade A office net take-up falls to negative 23,900 square meters in the third quarter from positive 144,700 square meters in the second quarter, ending six straight quarters of positive absorption. Gross leasing reaches 118,200 square meters, but that is outweighed by 142,100 square meters of space returned to the market as companies consolidate, relocate, or cut office footprints.

Metro Manila's overall vacancy rate rises to 19.2% in the third quarter from 18.9% in the previous quarter, while vacant Grade A stock reaches about 1.96 million square meters at end-September after a 40,700-square-meter increase during the quarter. Savills says the added vacant space, combined with the upcoming completions, could push the vacancy rate above 20% by year-end.

Makati CBD is among the districts facing fresh pressure, with Savills estimating that the completion of Yuchengco Centre could lift vacancy to around 23% by year-end from 20.9% in the third quarter. The district posts negative net take-up of 2,100 square meters, while gross leasing declines to about 13,700 square meters from 24,800 square meters in the prior quarter, although average monthly rents still rise 0.8% to P999.50 per square meter.

In Quezon City, vacancy climbs to 23.1% from 19.8%, the sharpest increase among the districts tracked, after negative net take-up of 30,900 square meters linked largely to a major tenant relocation. Savills projects vacancy there could rise to around 26% by year-end.

Ortigas Center records positive net take-up of 7,800 square meters, lower than 14,800 square meters in the previous quarter, and its vacancy rate improves to 18.6% from 19.2%, marking a fourth straight quarter of tightening. Even so, around 81,700 square meters of office space is scheduled for completion across the fourth quarter of 2026 and the first quarter of 2027, which Savills says could push vacancy back to around 22% by early 2027.

The Bay Area posts positive net take-up of 11,600 square meters, but its vacancy rate remains at 35.3%, the highest among the established business districts in the report. Savills expects Bay Area vacancy to rise to around 36% by year-end and stay near that level through 2027 as more office space enters the market.

Despite the broader vacancy increase, average Metro Manila Grade A office rents rise 0.5% quarter on quarter to P861.10 per square meter per month, the third consecutive quarterly increase. Alabang CBD leads rental growth at 2.8%, followed by Ortigas Center and Quezon City at 1.5% each, while Bonifacio Global City is the only major district to post a decline, with average rents easing 0.4% to P1,089.60 per square meter.

Savills says competitive rents and a wider choice of office space could attract startups and expanding companies to establish or enlarge their presence in Metro Manila. Still, the large volume of completions due in the final quarter is expected to keep leasing conditions favorable to tenants, especially in districts with elevated vacancy.

In our earlier article, we examined the Philippines’ planned sovereign bond reforms, including a new pricing convention for peso government securities and steps toward inclusion in a major emerging-market bond index in early 2027. We noted that while these moves can widen the investor base and improve liquidity, the broader payoff for business investment depends on factors such as global rates, fiscal credibility, and deeper capital-market and structural reforms that improve access to financing and productivity.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.