Colliers Insights


LIKE the Philippine property market in general, Colliers is seeing positive trends for the Metro Manila office market.

Occupiers can benefit by re-thinking their workplace as an investment that can help achieve their company’s vision and goals. In our view, the office can be maximized not only in terms of space utilization but also in terms of its value in talent recruitment and retention, and how it can align both employee and company values.

Metro Manila saw a marginal decline in office vacancy due to improved transaction activity and a slowdown in non-renewals in the first half of 2023.

Uneven recovery in rents is still being experienced across Metro Manila submarkets, with rental recovery noted in Makati central business district (CBD), Fort Bonifacio and Ortigas CBD.

Net absorption for the second quarter has improved, mainly driven by higher transactions volume coupled with the slowdown in vacated spaces.

With these new developments in the market, we project a higher net take-up by year-end. However, vacancy is still expected to remain elevated with more supply coming online in the latter part of 2023.

Colliers believes that landlords and tenants should continue seizing opportunities given the current tenant-leaning market. Occupiers may consider implementing flight-to-value or incorporate flex workspace in their real estate strategies.

With the increased interest in ESG (environmental, social, and corporate governance) and DE&I (diversity, equity, and inclusion), landlords can work with tenants on office renovations and incorporate these elements within building amenities and common areas to help align corporate and employee values.

Amid the ongoing transformation of the workplace and the workforce, occupiers should facilitate continuous dialogue with their stakeholders to determine how best they work and what can retain and attract talent to the organization.

Occupiers continue to see the office as critical to employee engagement, especially for new hires. More are using the office as a recruitment tool and training floor, as it now becomes a company’s platform to encourage people to come together.

With the renewed interest in DE&I and ESG, occupiers should consider these in their real estate strategies. Reflecting this in workplace strategy and design helps in differentiating the company and ensures talent retention.

One of the major employee concerns on return to office (RTO) is the cost of moving back to their Metro Manila head offices. Implementing full RTO increases the risk of employee attrition, which can be costly for companies.

To address this, opening sites in provincial areas may be a viable strategy to address the gap between work from home (WFH) and RTO for employees.

In the second quarter of 2023, Colliers recorded the delivery of 80,400 square meters (852,200 square feet) of new office space, with the completion of Primex Tower in San Juan and Parqal Buildings 1-9 in the Bay Area.

In 2023, Colliers expects the completion of 668,400 sq.m. (7.2 million sq.ft.), higher than our previous estimate of 569,100 sq.m.  (6.1 million sq.ft.) as some landlords are on track to meet their buildings’ completion timelines to accommodate upcoming demand.

We project 538,900 sq.m. (5.8 million sq.ft.) of additional supply coming online in the second half of 2023, with Fort Bonifacio, Ortigas CBD and Quezon City likely accounting for nearly two-thirds of the new supply.

Meanwhile, 402,000 sq.m. (4.3 million sq.ft.) in the pipeline were put on hold or shelved by developers as of the first half of 2023, higher than the 166,000 sq.m. (1.8 million sq.ft.) in the first quarter of 2023. In our view, these projects may be redeveloped or reactivated by developers in the future.

From 2023 to 2025, Colliers sees the completion of 492,400 sq.m. (5.3 million sq.ft.) annually. This is only half of the one million sq.m. (10.8 million sq.ft.) completed annually from 2017 to 2019, a period wherein office completion was heavily influenced by the Philippine Offshore Gaming Operators’ (POGO) demand.

In the first half of 2023, office deals in the capital region reached 306,000 sq.m. (3.3 million sq.ft.), down 5% year on year. Traditional firms including government agencies, telcos, insurance firms, and flexible workspace operators logged transactions of 125,700 sq.m. (1.4 million sq.ft.).

In the second quarter of 2023, outsourcing and shared services firms dominated transactions with 73,000 sq.m. (785,500 sq.ft.) of closed deals. Colliers has observed that most outsourcing firms are still actively expanding and are employing flight-to-value strategies despite hybrid work arrangements, transferring to new, high-quality towers in Makati CBD, Fort Bonifacio, and Ortigas Center.

Per submarket, the Bay Area, Ortigas CBD and Makati CBD recorded the largest volume of transactions in the first half of 2023, covering 57% of total office deals in Metro Manila.

Among the notable transactions in the first half of 2023 include spaces leased by Telus, 24/7 Intouch and Reed Elsevier in Quezon City; IGT Solutions in Alabang; Chevron and Opentext in Makati CBD; and Transparent BPO and the Department of Transportation (DoTr) in San Juan City.

Office transactions in key provinces rose quarter on quarter as deals in the first quarter of 2023 reached 60,400 sq.m. (649,900 sq.ft.), from 29,300 sq.m. (315,300 sq.ft.) a quarter ago.

In the first half of 2023, these deals totaled 89,700 sq.m. (961,900 sq.ft.), a marginal drop from the 90,700 sq.m. (975,900 sq.ft.) recorded a year ago. Cebu accounted for 48% of total provincial deals, mostly from outsourcing firms, followed by Pampanga (26%) and Davao (11%).

Colliers is optimistic that gains in the Metro Manila office sector will be sustained for the remainder of the year. The profile of tenants occupying physical space remains diverse while key office hubs outside Metro Manila continue to record transactions. Optimistic business sentiment and robust macroeconomic growth forecast should support firms’ expansion over the next 12 months.


Kevin Jara is the associate director for office services — tenant representation at Colliers Philippines.