The logistics sector has emerged as the “king” of the Philippine industrial real estate industry, with strong prospects for long-term growth and sustainability. This shift is driven by the country’s transition to a largely import-driven economy, as the manufacturing industry continues to decline.
“Logistics is king!” declared Ninoy Teo, senior director of investment services at leading property and management consultancy firm KMC Savills, during a presentation on Friday, Jan. 25. The event, “The 2025 Panorama”, brought together experts and industry leaders to share insights on real estate trends and forecasts in the Philippines.
Teo explained that demand in the logistics sector is primarily fueled by investments in new manufacturing warehouses in key provinces like Cavite, Laguna, Bulacan, and Pampanga.
These facilities support the growing e-commerce, fast-moving consumer goods (FMCG), and retail industries. Batangas has also seen a surge in manufacturing activity, attracting industries such as electronics, FMCG, and automotive parts due to its proximity to the Batangas Port.
Bulacan stands out for its competitive rental rates, averaging P191 per square meter, making it an attractive option for businesses seeking affordable yet strategic locations. Meanwhile, Laguna has emerged as a leader in leasing activities, accounting for 48% of demand, thanks to its prime location near the South Luzon Expressway (SLEX), which makes it an ideal hub for distribution centers.
“Warehousing is sustainable, and we have the demographics to support that,” Teo noted, emphasizing the Philippines’ reliance on imports, including rice. He acknowledged, however, that the manufacturing sector is a “sunset industry” in need of government intervention to survive.
Currently, 46% of industrial real estate demand is driven by the growth of larger logistics hubs. Warehousing dominates the market, accounting for 99% of his team’s transactions. “That’s a testament to where the industrial sector is right now,” Teo said, pointing out that the import-driven nature of the economy is pushing companies to focus on building warehouses.
While the industry offers a modest investment yield of 5% to 7%, Teo predicted that this margin will grow over time, supported by the country’s expanding economy, large population, overseas Filipino workers remittances, and consumer-driven market. He emphasized that the logistics sector’s growth is highly sustainable and poised for long-term success.
“As we say, cash is king, but in the industrial segment, logistics is king,” Teo added.
In terms of sustainability, KMC Savills CEO Joe Curran highlighted emerging trends in warehouse construction, including global standards for wastewater treatment, energy efficiency, build-to-suit setups, and automation.
Teo echoed this sentiment, underscoring the sustainable growth of the warehousing sector, not only in terms of financial performance but also environmental impact.
