The offshoring and outsourcing (O&O) industry accounted for nearly half of the 407,010 square meters of office space vacated in Metro Manila in 2024. Sustained moveouts by office occupiers kept vacancy rates high at approximately 20%, according to data from leading real estate management and consultancy firm Jones Lang LaSalle (JLL) Philippines.
Janlo delos Reyes, JLL’s Head of Research and Strategic Consulting, said that O&O or business process outsourcing (BPO) companies accounted for 46.3% of total vacated office space, followed by traditional corporate occupiers at 30.8%.
Meanwhile, internet gaming licensees (IGLs) or Philippine Offshore Gaming Operators (POGOs) accounted for 22.9% of total vacancies, with 19,000 square meters of pullouts recorded in Parañaque.
On a quarterly basis, JLL data showed that the largest pullouts occurred in the last quarter of the year, with 135,640 square meters vacated—an increase from 128,998 square meters in the third quarter.
The overall moveouts in 2024 were significantly higher than the 334,890 square meters vacated in 2023.
According to delos Reyes, these vacancies were primarily driven by BPO and corporate firms reassessing their office requirements amid ongoing hybrid work arrangements. The ban on POGOs further contributed to the increase in vacancy levels.
Due to heightened moveouts, the overall vacancy rate in 2024 rose to 19.9%, up from 18.5% in 2023. Among major central business districts, Parañaque recorded the highest vacancy rate at 52%, followed by Manila at 36.3%, Pasay City at 24.2%, and Quezon City at 20.6%.
Despite the rising vacancy rate, rental growth remained stagnant, averaging ₱11,100 per square meter.
With an expected 682,000 square meters of new office space set to enter the market in 2025, delos Reyes projected a competitive leasing environment as landlords work to attract tenants.
“We expect rental rates to marginally decline to around ₱950 to ₱960 per square meter per month, as 682,000 square meters of new supply, with low pre-commitment levels, enters the leasing market in 2025. While supply will taper off from 2026 to 2028, elevated vacancy rates and soft demand will continue to favor tenants,” delos Reyes said.
Overall, JLL anticipates the office market to remain soft in 2025, with high vacancy rates exerting pressure on the market amid continued supply, leading to a marginal decline in rental prices.
However, delos Reyes noted potential upsides, particularly from BPO firms expanding from Southeast Asia and Australia.
