Philippines flexible workspace demand rises as office leasing slows

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Philippines flexible workspace demand

Highlights

Metro Manila office transactions fall 26% year on year to 500,000 sqm in 9M 2026, while provincial leasing plunges 50% to 105,000 sqm.
Flexible workspace net take-up surges 185% to 7,600 seats and leasing rises 48% to 64,000 sqm in 9M 2026, outpacing all other segments.
Metro Manila office vacancy rises to 19.5% in Q3 2026 as new completions add supply, forcing landlords to reprice amid continued tenant-favorable conditions.

Leasing slowdown and flex expansion in 2026

As reported by BusinessWorld Online, office leasing activity in the Philippines remains muted in the first nine months of 2026, even as flexible workspace operators post strong growth. Metro Manila records 500,000 square meters of office transactions in 9M 2026, down 26% from 673,000 square meters a year earlier, while provincial leasing falls 50% year on year to 105,000 square meters.

The weak demand environment reflects prolonged uncertainty tied to the U.S.-Iran conflict, high interest rates and elevated inflation, which continue to weigh on occupiers' leasing decisions. Fort Bonifacio and Makati central business district lead Metro Manila's submarkets, while Cebu remains the top provincial market.

At the industry level, nearly all occupier segments except flexible workspace providers post year-on-year declines in transactions. The information technology and business process management sector logs 197,000 square meters of leasing in 9M 2026, down 18% from a year earlier, as the industry shifts toward higher-value capabilities and AI-enabled talent under IBPAP's recalibrated 2028 Roadmap.

The flexible workspace segment stands out as the market's strongest performer. Net take-up reaches 7,600 seats in 9M 2026, up 185% from 2,665 seats a year earlier, while leasing by flex providers rises 48% year on year to about 64,000 square meters.

Tenant-friendly market reshapes landlord strategy

Nine new flexible workspace centers add about 2,325 seats in the third quarter, bringing total inventory to roughly 60,400 seats, with another 2,700 seats expected in the fourth quarter. Fort Bonifacio and Makati central business district account for 57% of flex expansion activity, showing where operators are concentrating new capacity.

Across the wider office market, Metro Manila vacancy climbs to 19.5% in the third quarter of 2026 after new office buildings are completed in Makati Fringe and Arca South. Colliers expects vacancy to remain at that level through year-end, with softer demand likely to persist and only about 141,000 square meters of new supply due in the fourth quarter as deferred completions limit further additions.

The market dynamic increasingly favors occupiers, as landlords with large vacant spaces reprice to stay competitive and incoming Grade A supply broadens tenant options. Companies are likely to keep prioritizing flexibility and cost predictability over long-term commitments, while older buildings with high vacancy may need repositioning as competition intensifies through 2026 and beyond.

In our earlier coverage of the WTO’s warning on war-driven trade disruptions, we outlined how conflicts in Ukraine and the Middle East are pushing companies to reroute shipping and redesign supply chains in ways that could outlast the fighting. The report highlighted that resilience-focused alternatives often come with higher costs, while the broader trade outlook remains shaped by ongoing geopolitical risks, tariffs, and uncertainty despite a 2026 trade growth forecast supported by AI-related demand.

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